Are UltraFICO & Experian Boost Solutions For Your Credit Challenges? (2024)

Are UltraFICO & Experian Boost

Solutions For Your Credit Challenges?

Ever since the announcements regarding the new

credit scoring systems"UltraFICO"and"Experian

Boost"were made last year (and their subsequent

implementationearlier this year), questions regarding their

use, legitimacy, accuracy, and abilities have come my way ...

In most instances, the

questions come from

those considering

home buying or

refinancing but

suffering from credit

scores considered

"fringe" or low scores

... either as a result of

NO/little credit or credit issues having occurred. They're

looking for answers and fixes for the challenges they face.

And challenges do exist. WhileFICO reportsthat, for the

first time since tracking these stats, the average national

FICO Score has reached the 700 threshold (in actuality, 704,

an increase of around 10 points above the score reported

prior to the housing recession that began in 2006),credit

remains of great concern for many home buying prospects.

Why?

Prospects know credit scores will weigh heavily in their

upcoming mortgage search. They will dictate what mortgage

options are available to them, what mortgage costs they'll

face, the interest rate offered, and ultimately ... Mortgage

Approval itself. So opportunities and methods to increase

creditscores are obviously of great importance and interest.

Along comes UltraFICOand Experian Boost. They've

caught these hopeful homebuyers' attention, as each declares

they havethe ability to establish or raise credit scores for

their customers. But can they truly deliver on their

promises? Let's do some examining ...

Below is some information you should have at your disposal

prior to making a decision to use their services or not:

With UltraFICO ...

• UltraFICO is a free service
• UltraFICO influences Experian-based Credit Scores only
• Customers must "opt-in" toUltraFICO
• Clients link their Checking, Savings or Money Market Accounts (customer choice) to the service
• To link and access their banking info/data, customers must useFinicity(an account aggregation company/app)
• The account data/info chosen by the customer contributes to their UltraFICO score
• UltraFICO only works with certain FICO algorithms

What UltraFICO considers during its scoring:

1. Evidence of customer's consistent Cash on Hand
2. History of positive account balances
3. Length of time customer's Account(s) have been open
4. Recency/Frequency of client's Bank Transactions

... or basically, a client's "money habits".

It's important to point out:AnUltraFICO Score does

NOT replace a FICO Score.

With Experian Boost:

• Experian Boost is a free Experian service
• Customers must "opt-in" toExperian Boost, which means they mustsign up for an Experian account
• By opting-in, customers agree to let Experian connect to their online bank account to track the utility and telecommunication bill payments they choose
• Finicitymust be used for Experian Boost to access account info/data
• Experian Boost influences Experian-based Credit Scores only
• Signing up for Experian Boost gives you free access to your FICO Score from Experian (not Equifax or TransUnion)
• When "opting-in", customers grant permission to Experian Boost to seek online banking data/info on:

1. Telecommunications Payment Data
2. Utility Bills Payment Data

... in both cases, the customer must confirm the data

received.

Sounds great, doesn't it? Well yes, maybe, and no ...

For those seeking to establish credit or repair

severely damaged credit,these two credit-boosting

servicesmayserve a purpose. (Although as a Mortgage

Originator,I maintain that credit can be easily established

For those that find themselves in these scenarios and also

thinking of utilizing either service, remember to always ask

the following before applying for any new credit, "Do you

report to the Credit Bureaus?"

Your goal is to have that new credit reflected in your Credit

Report, so proceed with any new credit application according

to the answer you receive. (Pass on applying if they cannot

answer this question definitively.)If you decide to move

forward with an application, be aware that your new credit

will typically start to show on your credit report within 30

days of the close of the account'sbilling cycle.

Now it's important to point out at this time:

scoring models for credit

reportsthat FICO alone "has

more than 50 different

versions of your score that it

sends to lenders. The score

may change, depending on

what company asks and

what was important to that

company in calculating your

score". Other models exist too. Scoring models, such as

VantageScoreand Community Empower, and are also

being used by companies.

That's a lot of information. But what does it all mean for

consumers?

Well first, it means the credit scorethat you receive

from your credit card company ... (think Discover, Visa, etc.)

can be quite different than the credit scores received and

used by your bank for an auto loan. Different scoring models

reap different credit scores.

And let's go a few steps further. The credit scores referred to

in the above paragraph? Those credit scores can also be

different from those utilized by your insurance company,

telecommunication, and utility companies, etc. And they're

allgoing to be different than those used by most mortgage

lenders, as that algorithm and scoring model is specific to

themortgage industry alone.

While doing some research for this article,I ran

across a statement regarding Experian Boost, made by

theExperian credit bureau themselves. I thought it pretty

interesting and revealing.

In that statement, Experian said,“Only positive payment

histories will be aggregated through the (Experian Boost)

platform and consumers can remove the new data at any

time.”

In other words, customers choose the accountstheywant to

link and report to Experian Boost. It's only natural to

assume that customers will choose only those accounts that

reflect well on their finance/credit choices and ultimately on

their Credit Scores.

But Mortgage Lenders want and requirea more

complete and thorough picture of an applicant's credit at the

time of their mortgage application and underwriting. That

means negative info along with positive info must be

receivedand vetted.

To that end, Mortgage Lenders typically request what is

called a "tri-merge credit report" or Residential Mortgage

Credit Report (RMCR) for mortgage applicants.This tri-

merge report takes the data provided by the three (3) major

credit bureaus(Experian, TransUnion, and Equifax) and

merges it into one single report. That report provides a

thorough and detailed picture of the applicant's entire credit

history including their credit habits and how they've utilized

their credit in the past.

Currently, neither UltraFICO nor Experian Boost is

acknowledgedby all algorithms, including that used by

Mortgage Lenders. That's a big problem for those hoping to

buy and finance (or refinance) a home now or in the future.

So what should you do if you're in need of reliable credit info

or assistance? If you hope to establish or improve your

credit scores?

The answer is fairly simple:Seek the guidance and

assistance of an experiencedmortgage lender.

Doing so is a wise decisionwhetheryour goals include home

buying or not, as amortgage lender can provide you sound

timely advice that will help you establish and/or improve

your credit and credit scores both in the short and long

term.And best of all, their service is typically provided at no

charge.

I think it's never a bad thing for anyone to seek information

and opportunity to improve upon their finances or credit

scores. I applaud that heartily.

But until the benefits reapedfrom UltraFICO and

Experian Boost are more inclusive to a wider range of credit

scoring models and algorithms, neither may provide the

results a consumer really needs or is ultimately hoping for ...

*Hoping to establish good credit?Have credit questions?

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Contact metoday! I'll put my 40 years of mortgage experience and expertise to work on your behalf.I'm easily found at: