Credit Report Changes in 2019

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Last Update: September 9, 2021 Credit Cards Credit Report Financial News Loans

With 2019 already in full swing, credit reporting changes start to take effect.

Experian and the Fair Isaac Corporation (FICO) – two of the most trusted credit score providers – recently added new metrics to analyze borrowers’ overall creditworthiness. Credit scoring models add variables to clarify what defines risk from utility and cable bills to checking and money market accounts.

And how does this affect you?

Well, whether you have bad credit or sit comfortably near the top-end of the range, the programs below offer an easy pathway to enhance your credit score.

Want to know how?

UltraFICO Score

Launched in early 2019, the UltraFICO Score offers similar credit score benefits to Experian Boost.

However, the metrics used are different.

Here the company analyzes your checking, saving, and money market account behavior to provide a better assessment of your overall creditworthiness. It can increase your credit score by displaying a reliable financial history and better overall lending terms.

Designed specifically for those with a minimal credit history or those whose traditional FICO Score doesn’t tell the full story, the UltraFICO Score lets your banking activity tell a more comprehensive story about your financial behavior.

The UltraFICO Score shows lenders:

  • How long your accounts have been open.
  • How recent and frequent bank transactions you have.
  • How long you’ve had positive account balances.
  • Clear evidence of consistent cash on hand.

So it all sounds great in theory, but how does it work in practice?

Well, to see a boost in your credit profile, you have to meet the minimum requirements.

If you maintain an average savings account balance of $400 and have no negative balances within a three-month period, you should expect an initial boost of 20 points.

To avoid any confusion, we have to point out that the UltraFICO Score differs significantly from a traditional FICO Score:

  • The UltraFICO Score process is entirely voluntary; lenders can only access your information if you opt into the program.
  • Most importantly, the UltraFICO Score does affect your traditional FICO Score in any way. The UltraFICO Score is used to provide supplemental information to lenders so they can get a better sense of your overall financial situation. The results do not become part of your official credit report.

So who benefits the most by opting in?

Without a doubt, it’s borrowers with below-average credit scores.

If you have an average or good credit score, you have plenty of reliable lending options at your disposal. However, those with below-average or bad credit scores usually settle for less attractive options with unfavorable terms.

By opting into UltraFICO, you can increase your credit score and open your horizon to products that were once unavailable to you.

Experian Boost

Experian, who partnered in developing the VantageScore to provide a broader look at one’s overall creditworthiness and developing the VantageScore, launched Experian Boost in early 2019. Experian Boost incorporates utility, phone, and TV bill payments into its scoring model. It offers a way to increase your credit score and provide a more accurate depiction of your financial situation.

And how does it work?

Well, if you make regular utility and telecom bill payments in full and on time, your payment history will be used to improve your credit score.

You need to grant Experian permission to access your online bank accounts and identify applicable payments to sign up for the program. After you verify the accuracy of the information and confirm you want it added to your credit profile, a real-time FICO Score is delivered to you immediately. Moreover, the entire process takes roughly five minutes to complete and can offer an immediate credit boost in lenders’ eyes.

So all of this sounds great, but is there a cost?

That’s the best part.

It’s completely free.

Experian Boost helps borrowers get approved for a loan. Through its research, Experian found 75% of consumers with FICO Scores below 680 saw immediate credit score improvement after signing up for the program.

Experian Boost will also benefit:

  • 100 million people who previously didn’t qualify for mainstream credit.
  • The 10% of consumers who previously didn’t have a credit score.
  • The 75% of consumers with FICO Scores below 680 saw an immediate improvement.
  • After signing up for Experian Boost, 5% to 15% of consumers reached a higher FICO Score.
  • After signing up for Experian Boost, people could move into the Fair (580-669) or Good (670-739) credit score brackets.

3 Ways to Boost Your Traditional Credit Score

While signing up for the programs above can be a great way to improve your credit score, we have some other tips to help move the needle in 2019.

  • Keep bill payments current

Considering 35% of your traditional FICO score is attributed to your payment history, staying up-to-date on your bill payments can help move your credit score in the right direction.

  • Keep credit card charges to less than 30% of your total balance

Accounting for 30% of your FICO Score calculation, responsible credit utilization can positively impact your credit score. Don’t apply for new credit cards that you don’t need and pay off debt rather than just transferring it from one card to another.

  • Lower your debt-to-income ratio (DTI)

While screamingly obvious, increasing your income or decreasing your debt will positively affect your credit score. This problem wouldn’t exist in a perfect world, and we know how difficult it can be in real life. But try your best to develop a debt-repayment plan that you can both afford and adhere to. As well, always pay down debt with the highest interest rate first.

Sources:

Introducing Experian Boost

Introducing the UltraFICO Score

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