To boost credit scores, FICO, Experian, Finicity want bank data

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In a move designed to improve access to financial products for consumers with low credit scores and short credit histories, Experian, FICO and Finicity are developing an "UltraFICO" score that lets individuals share checking and savings account data and help lenders better assess risk.

"This approach allows Americans to benefit from positive financial behaviors," Steve Smith, CEO of Finicity, said in a press release.

UltraFICO could open up credit access for consumers with marginal traditional credit scores ranging from the low 500s to the 600s, according to the release. It also could help boost the scores of consumers with short or limited credit histories, or who are in recovery after a period of financial distress.

The new score is on track to start as a pilot program in early 2019. In the pilot, the three companies are aiming to find out how willing consumers are to share financial data with the aim of possibly obtaining a higher score.

FICO is developing the model for the new score, Experian is implementing it and integrating into lenders' operations, and Finicity is aggregating the borrower data.

Given the recent rise in rates and decline in loan volumes, lenders have been more interested in reaching more borrowers in this subprime score range without taking on undue credit risk.

Mortgage lenders would be most likely to adopt UltraFICO if Fannie Mae and Freddie Mac did. The two government-sponsored enterprises have been encouraging lenders to use consumer-authorized financial data to validate underwriting information, and have evaluated credit score alternatives. But so far they continue to use an older FICO score in the underwriting process itself.

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Credit scores GSEs Digital payments Subprime lending Credit reporting Consumer banking Fintech FICO Finicity Experian