For millions of Americans, it might soon be easier to get a mortgage loan — or any type of loan, for that matter — especially if they fall in the 500 to 600 FICO score range or have little to no credit history at all.
The change comes by way of the UltraFICO — a new type of credit scoring system that aims to help consumers establish credit based on banking and savings activity, rather than credit cards, loans and other debts.
Freddie Huynh, vice president of credit risk at Freedom Financial Network, called UltraFICO “a great development for consumers.”
“When it comes to credit scoring, new data, as long as it is accurate data, is good for consumers,” Huynh said.
The new score is said to most benefit the 7 million consumers who fall into the upper 500 to low 600 FICO score range — usually just under a lender’s minimum credit threshold. It should also help the 15 million Americans who have no credit score at all (due to never taking out a loan, applying for a credit card, etc.)
It also gives consumers more control of their financial options, according to Steve Smith, CEO at Finicity — which is helping to launch the new score.
“While this data will not substitute for the traditional credit score, it empowers consumers to contribute their positive data to help boost their current scores and achieve the right loans with more competitive terms than before,” Smith said. “The UltraFICO score is revolutionary because, for the first time ever, consumers will play a direct role in determining their own credit scores.”