Profitt Report: This new credit-scoring formula should open credit to millions of people

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More people could soon be able to open a credit card or take out a loan thanks to a new credit-scoring formula called UltraFICO.

Right now, your credit score is calculated based on your credit reports, which include length of credit history, payment history and types of credit. UltraFICO will look at how you manage your money.


“It’s essentially a second look,” said Ted Rossman, industry analyst of Creditcards.com, “if you're denied credit, you'll be given an opportunity to take a second look at your account.”

FICO would need your permission to look at your bank accounts.

“They’re going to look for a long-standing banking relationship hopefully, they want to see that you're avoiding overdrafts and they want to see you have at least $400 in your account and that you're steadily adding to your account,” Rossman said.

However, consumer advocates are worried about UltraFICO in the long-term.

Consumer Reports says, think about the 2008 housing crisis, when lenders provided mortgages to borrowers who couldn’t afford it once the economy took a nosedive.

“I would advise consumers, even if they can use UltraFICO to get in the door on a loan, just be very careful that this is the kind of loan you can pay back in all types of economic environments, not just the best case,” Rossman said.

The Profitt Report wants to hear from you - please send consumer questions and story ideas to ProfittReport@WSMH.com

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