FICO May Boost Credit Scores With New Rating System

October 22, 2018 - 10:45 am

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FICO, the company that rates individuals based on their credit history, will introduce a new system next year that may boost many consumers' scores. 

Besides looking at monthly payment history and debt, the new UltraFICO program will also look at records from savings, checking and money-market accounts. 

This method will be a supplement to the traditional FICO score that affects consumers' ability to open a credit card, borrow money for a car or get a mortgage. 

“All it's gonna do is supplement and possibly give a second look at the consumer to help them to see if they’re better at credit risk,” said Al Bingham, a credit expert and personal finance author. 

FICO, also known as Fair Isaac Corporation, said that nearly seven million candidates with low scores because of narrowing borrowing histories should expect to see an improved rating under the new system. 

Likewise, the new rules could create borrowing possibilities for people with limited credit histories. 

The Wall Street Journal reported that lenders are looking for ways to approve more loans. Average scores are high, according to the Journal, with a record 58 percent of consumers boasting a score of 700 or higher. The max FICO score is 850. 

Written by Arooba Kazmi.