New FICO System

New FICO system could lift credit scores by including checking and savings history

by Janna Herron 


(Photo: Getty Images)

You may soon earn a higher credit score if you balance your checkbook responsibly.

FICO, the developer of the most widely used credit score, is rolling out a new score next year that considers how you manage your checking, savings and money market accounts in addition to how you pay back your credit cards and loans.


This additional information could help boost the credit scores of some of the 79 million Americans who have poor credit histories, along with the 53 million who have no credit score at all under the traditional FICO model. That, in turn, could help them qualify for a credit card or loan.

“We’ve been focused on financial inclusion, and what we’ve done can potentially improve access to credit for the majority of Americans who participate in it,” says Sally Taylor-Shoff, vice president of score at FICO. “Consumers new to credit along with those who have had previous financial distress, those groups stand to benefit the most from the new UltraFICO Score.”

How does it work?

If your credit score isn’t high enough to qualify for a loan or credit card, or sits on the cusp of getting a better rate, a lender can offer to use your banking activity to generate an UltraFICO Score. You also can choose which accounts – checking, savings or money market – will be considered in the recalculation. The score uses the same 300 to 850 range that other FICO scores have.

“It's like combining peanut butter and chocolate,” says John Ulzheimer, a credit expert who formerly worked at FICO and Equifax. “(These are) two useful sources of data, combined into one score.”


The average U.S. consumer credit score has reached an all-time high according to FICO. As anyone who has applied for a mortgage or a car loan knows, a solid credit score is essential. (Photo: AndreyPopov / Thinkstock)

Experian, one of the three main credit bureaus, will gather your bank account data using Finicity, a financial technology company, and send the new score plus a summary of your bank accounts to the lender for a second evaluation. Experian will maintain the bank account data to address any accuracy disputes.

It’s possible that your credit score could decrease after the new banking information is added, according to Taylor-Shoff, so it’s important to understand when your bank account could help you.

What is a good bank account?

The biggest factors are average account balance and history of overdrawn accounts. Those who maintain an average balance of $400 and show no negative balances in the previous three months will benefit the most from the UltraFICO Score, Taylor-Shoff says. Other positive factors FICO considers:

• Having more deposits than outflows.
• Having an account open and active for some time.
• Regularly paying bills such as utilities and rent from these accounts.

Seven in 10 people who demonstrate responsible checking and savings account behavior can improve their score under the UltraFICO scoring system, the company said, some by as much as 20 points. That can translate into a lower interest rate or the difference between an approval and denial.

What's next?

The new score begins its pilot program at the beginning of next year. FICO plans to offer the scores to all lenders by that summer. Pentagon Federal Credit Union, the third-largest credit union in the U.S. by assets, is participating in the pilot program.

Taylor-Shoff said many lenders are interested in the new score. But it remains to be seen how fast lenders will adopt this supplemental scoring system. For instance, FICO’s latest credit score – FICO 9 – was released four years ago, but the previous version of the score – FICO 8 – remains the most widely one used.

“You can build the best mousetrap in the world, but if no one buys it, it doesn’t matter,” says Ulzheimer. “In some ways, FICO can be a victim of its own success.”