New system improves credit access, giving consumers more control in credit scoring process, lenders and FinTechs set to pilot
Experian®, FICO and Finicity® announced a new credit score during the Money 20/20 USA conference. The new score, called Ultra FICO® Score, leverages account aggregation technology and distribution capability from Experian and Finicity to help consumers improve access to credit by tapping into consumer-contributed data, such as checking, savings and money market account data, that reflects responsible financial management activity.
With Ultra FICO® Score, a consumer grants permission to contribute information from banking statements, including the length of time accounts have been open, frequency of activity, and evidence of saving, which can be electronically read by Finicity and combined with consumer credit information from Experian to provide an enhanced view of positive financial behavior.
Experian, FICO and Finicity estimate this new score has the potential to improve credit access for the majority of Americans and is particularly relevant for those who fall in the grey area in terms of credit scores (scores in the upper 500s to lower 600s) or fall just below a lender’s score cut-off. Consumers who are relatively new to credit with limited history or those with previous financial distress that are getting back on their feet stand to benefit the most.
“This changes the whole dynamic of the lender and customer relationship,” said Jim Wehmann, executive vice president, Scores, at FICO. “It empowers consumers to have greater control over the information that is being used in making credit risk decisions. It also enables a deeper dialogue between the consumer and lenders to help both parties make better financial decisions. It’s a game changer.”
The Ultra FICO® Score will launch as a pilot program in early 2019. The pilot is designed to validate the score and assess willingness of consumers to share financial data for a potentially higher score. Pilot participants were sourced across various lines of businesses.
The model developed by FICO will be implemented through Experian and integrated into a lender’s existing operational workflow. Borrower data will be aggregated through Finicity. The Ultra FICO® Score builds off of the framework of the base FICO® Score, and is designed to reflect the same odds-to-score relationship so that the new score can be easily incorporated into lending strategies and origination/account management systems. The Ultra FICO® Score is slated to be broadly available to lenders mid-2019.
“As the consumer’s bureau, our goal is to help empower consumers and to give better access to credit for more consumers, all while promoting fair lending,” said Alex Lintner, president, Consumer Information Services, Experian. “Through this project, we’ve found a new way to use consumer-permissioned data that allows lenders to make better decisions and helps consumers gain access to credit.”
“This approach allows Americans to benefit from positive financial behaviors,” said Steve Smith, CEO, Finicity. “We are proud to have created a new way for consumers to share financial information, safely and securely so that a new Ultra FICO Score can be created.”
About Finicity: Founded in 1999, Finicity is a financial industry pioneer. With over 15 years as an innovator in Personal Financial Management and Consumer Financial Wellness, Finicity has built a culture that centers around enabling and celebrating the financial success of our customers. After 15 years in consumer Financial Wellness, Finicity took a core internal asset, our financial data aggregation platform, productized it, and began offering it to financial innovators through our Financial Data API.
The only thing better than helping some people achieve financial success is helping many people find success through our community of financial app developers.
We see a future where financial account data is delivered instantly to account holders in any app they choose through the Finicity data hub. We believe that secure data access, high data quality, and intelligent data enrichment are core to unlocking financial application innovation and will help account holders make better financial decisions. We believe that better financial decision making will make the world a better place.
Source: Experian Press Release