Nearly everyone needs to borrow money at some point in their lives. There's nothing wrong with that! Mortgages, car loans, and other types of credit are a normal part of financial life, but you need a solid credit score to qualify for them.
You're probably already familiar with the standard FICO score that banks and lenders use during the loan application process, but did you know that there's a new FICO score being rolled out? The UltraFICO offers a more in-depth look at your finances and could boost your overall credit score to help you get a better interest rate on your next loan—
Here's what you need to know.
How the UltraFICO Score Works
First, a reminder about what information the classic FICO score weighs to determine your credit-worthiness:
UltraFICO is designed to give lenders more information about a potential borrower's complete financial picture. For example, someone without much of a borrowing history could still be an excellent loan candidate because they are careful with their money in the bank. The UltraFICO is designed to give "extra credit" to just this kind of borrower. It's a new way of looking at people's financial behavior and rewarding good personal finance skills.
Who Benefits From the UltraFICO?
In general, UltraFICO works best for someone with a good (but not yet outstanding) credit score in the 650-699 range. The ideal candidate also has a longstanding checking account with zero overdrafts and an average balance of at least $400. This type of person could earn up to 20 extra points on their credit scores, which is enough to push someone hovering at 680 into the coveted 700+ range for more competitive interest rates.
UltraFICO is also good for banks and other types of lenders, who want to be able to help as many people as they can while being assured that they'll be paid back. It's another tool to help banks give conscientious borrowers a way to reach their dreams.
Right now, UltraFICO is just a pilot program, but it should be coming to everyone soon. When it does, make sure you're ready. If you're interested in opening up a banking account or applying for a line of credit, contact us today!