This Change Could Come to Your Credit Report — and Boost Your Credit Score
Reliably paying your cell phone and utility bills month after month never used to mean anything to your credit score. The same is true for maintaining a healthy bank account. But thanks to groundbreaking credit report changes that could be on their way as early as this year, your financial efforts outside of the credit realm could soon be rewarded. FICO and Experian recently announced plans to launch two unique new programs that could instantly lift your credit score — likely without changing anything that you are already doing. Here’s what you need to know about the programs and how these credit report changes could affect your credit health.
UltraFICO: The Basics
Fair Isaac Corp, the architect behind FICO scores, is expected to roll out a pilot program this year called UltraFICO. With UltraFICO, you can opt in to allow access to basic information about your bank account — such as average balances, age of accounts, and level of activity — to be factored into your credit score calculation. The information would be used to demonstrate how well you manage your bills and whether you have accumulated any savings. When you opt in to share your personal banking information, the new credit scoring model will evaluate your bank account on a one-time basis. The data from your account will then be calculated alongside the other factors that comprise a credit score. The other criteria that decide your score, such as payment history and age of accounts, will still be considered. FICO will just have an additional piece to evaluate.
Experian Boost: The Basics
Major credit bureau Experian is also set to usher in a pilot program of its own, titled Experian Boost, later this year. As with UltraFICO, consumers will be able to opt in to share additional information — but this time, the only data Experian will pull is the payment history for cell phone and utility bills. True to the program’s name, the focus here accentuates the positive. If you miss a payment or two, this negative information will not show up on your credit report. There is a limit, however. If you lapse on payments for three months, Experian will no longer pull the information from your phone or utility bill — which means that any increase you had seen from the data would disappear.
The Positive: Better Credit Opportunities
If your credit history lacks some positive entries, these credit report changes will likely prove particularly helpful. After all, paying a cell phone or utility bill every month, or maintaining a healthy bank account, can speak volumes about your financial health — perhaps even more than the value of your current credit score. You’ll stand a much better chance of qualifying for loans and credit card terms from lenders that might have snubbed your application in the past. The credit report changes could provide some useful evidence of your ability to manage ongoing bill payments, which could help a lender decide whether to approve you for a loan.
The Negative: Exercise Caution
Either of these programs could easily bump up your credit score, boosting your loan approval odds and saving you thousands in interest payments every year. Having a higher credit score puts you in position for higher loans with more favorable terms, and even more tantalizing credit card offers. Just make sure you don’t use the higher credit score as an excuse to apply for loans you cannot afford. A higher credit score can expose you to more opportunities for loans and credit cards — but if used improperly, you could end up saddled with excessive debt. And the flip side of these programs is that they are specific to a certain credit-scoring model and a credit bureau. If a lender chooses to work with a different scoring model or credit bureau, you won’t reap the benefits of these programs.
Another Helping Hand
If credit-building is among your 2019 resolutions, these credit report changes could prove to be a very positive development. While you wait for the programs to launch to the general public later this year, take some time