A Friday Chat About UltraFICO
NICOLE: We have to talk about the UltraFICO.
NICOLE: Do we have to?
NICOLE: Yes. I was going to say we didn’t have to talk about it, that I could just make it an Open Thread and let everyone else talk about it, but then I thought we owed it to The Billfold to explain what UltraFICO is.
NICOLE: It’s WORSE FICO.
NICOLE: Not necessarily.
NICOLE: Yesessarily! They’re going to add the way you manage your checking account to your credit score! It’s right there on the FICO website:
With the UltraFICO™ Score, consumers are empowered to contribute their checking, savings or money market account data to be leveraged by the score, providing an unprecedented and broader view for lenders to assess credit worthiness.
NOT FAIR, ISAAC. It’s called a credit score, not a checking, savings, or money market account score.
NICOLE: First of all, it’s opt-in —
NICOLE: Yeah, I saw that. I’m going to go empower myself to give FICO more reasons to judge me.
NICOLE: And second of all, it’s supposed to help people who might otherwise have a hard time getting credit. Like, if you can manage a checking account responsibly, you can probably manage a credit account responsibly.
NICOLE: How do you know that?
NICOLE: There’s this Wall Street Journal article that FICO put on its website so everyone could read it without having to jump the WSJ’s paywall, and it explains everything:
The UltraFICO score will function as an appeal of sorts, likely boosting many [credit] applicants with less-than-ideal records. If an applicant’s traditional FICO score falls short, a lender can offer to have the score recalculated to reflect banking activity. Would-be borrowers with at least several hundred dollars in their accounts, who have had the accounts for a while and who transact frequently and don’t overdraw are likely to see their scores rise, FICO said.
NICOLE: I didn’t see that article.
NICOLE: You have to keep scrolling. The FICO website isn’t super well-designed.
NICOLE: It’s still not fair that you have to have at least several hundred dollars in your accounts to get credit. I remember when we had to work to keep $500 in our checking account.
NICOLE: We had a credit card then, too.
NICOLE: Got it from our bank. They practically forced it on us.
NICOLE: And we didn’t use it. For years.
NICOLE: Because we were worried about running up a bill we couldn’t pay off.
NICOLE: And then one day we needed to book a hotel room for a conference.
NICOLE: Because grad school.
NICOLE: And we didn’t have enough money in our checking account.
NICOLE: Because grad school.
NICOLE: So we pulled that little piece of sticky tape off our credit card and called the number to activate it and put the hotel on credit.
NICOLE: And then paid it off over the next few months with interest, if I remember correctly. It wasn’t the smartest move.
NICOLE: The whole grad school experience wasn’t our smartest move. But the point is that we had credit when we needed it, and I’m glad that UltraFICO is helping more people get credit when they need it.
NICOLE: You wanna talk about the other time we used our credit cards when we didn’t have a lot of money in our checking account? How we got ourselves into $14,000 of credit card debt that took years to pay off? UltraFICO is just giving more people the opportunity to pay more interest and fees to credit card companies.
NICOLE: Look, that $14,000 of credit card debt sucked, but we weren’t earning very much money at that point in our lives and, thanks in part to the stuff we bought with those credit cards, we were able to turn things around. Sometimes you have to spend money to make money, and then spend more money to pay off the debt you incurred by spending the first round of money.
NICOLE: Okay, I think our chat has reached its conclusion. Let’s turn this over to The Billfold, and let them discuss whether the UltraFICO is a good idea.
NICOLE: No. It’s not.
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