FICO to test new type of credit score
Credit scores are about to get a tweak that might help those with weaker credit.
Fair Isaac Corp., the company behind the widely used FICO score, announced Monday that it will begin testing a new type of credit score next year with credit reporting agency Experian and technology company Finicity.
The new UltraFICO score requires consumers to agree to share added personal information, such as data from their personal checking, savings or money market accounts. The extra information is intended to provide a more in-depth picture of how they use their money and build on traditional information for credit scores, which are based largely on payment history.
It would potentially improve the credit score of many Americans, particularly those with weak credit or limited credit history. And it would provide a broader base of customers for banks to lend to.
The companies estimate that 79 million Americans have subprime credit scores, which it puts at 680 or below. And 53 million do not have enough data to generate a FICO score.
These scores are used to help evaluate credit worthiness for credit cards, loans and more.
The companies did not disclose how many lenders and others will be participating in the trial.