Credit scores are flawed. FICO has a new model that adds cashflow data. It might just offer the boost you need

Prices are rising again, and by some measures, consumer sentiment is as low as it’s ever been. That makes it an opportune time for some Americans to perhaps get a boost to their credit scores if they’re able to.

Now they might be able to.

Last fall, FICO announced a new generation of its UltraFICO Score—an upgrade to its existing scoring model—infusing it with real-time cashflow data (with consumer permission, of course) from fintech company Plaid.

The new and improved model is now live and available to lenders. FICO’s leadership says it could help lenders make better decisions about creditworthiness and, in most cases, consumers could see a boost to their credit scores.

What’s up with the new UltraFICO Score?

The new model looks at transactions going in and out of an applicant’s bank accounts, such as a checking account or savings account. Plaid’s infrastructure allows users to integrate their bank accounts with certain financial apps and platforms.

In this case, the goal is to give lenders a deeper understanding of their financial picture, thereby letting them extend credit offers or approve credit for those individuals, accordingly.

Of course, for some, the new score could also ding them a bit—for instance, if they’re experiencing cashflow difficulties, such as being between jobs.

Further, consumers are not automatically opted-in. They consent to share their information, through Plaid, when navigating a lender’s portal. If they opt not to share their data, the lender can’t calculate an UltraFICO Score.

What makes this score different?

“The old UltraFICO Score was trailblazing,” says Julie May, vice president and general manager of B2B Scores at FICO, about the original model that debuted in 2018. “But how we built this with Plaid is different.”

She adds that “the model itself is built to utilize credit bureau data and cashflow data to make an assessment of risk, and it’s ‘bureau-agnostic,’” meaning that “irrespective of which credit bureau a lender is using to make decisions, you can also pull an UltraFICO score.”

Previously, only one credit rating agency, Experian, worked in conjunction with the UltraFICO model. Now, Experian, Equifax, and TransUnion are all in the mix.

As a result, May says that almost 80% of non-prime credit applicants with a history of positive account balances “will see higher scores.”

“It helps us target the thin-file population, individuals who are new to credit, or not active credit users,” she says.

Adam Yoxtheimer, head of partnerships at Plaid, says “it’s very exciting to be able to go to market with FICO,” and that it’s interesting to see the inclusion of cashflow data into credit scoring models—something that, at one time, was considered a tad controversial.

“Ten years ago, we would’ve talked about this as an ‘alternative’ data source, thinking that it might, one day, become mainstream,” he says. “This new model is far enough afield to be considered innovative, but not too far afield to be scary and unadoptable.”

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