Changes coming to how credit scores are calculated

[redheadbaker]

No way in hell am I giving credit score agencies access to my online bank account. WTF??

6abc.com/finance/whats-the-deal-changes-coming-to-how-your-credit-score-is-calculated/5147462/

Credit scoring as you know it is about to change.

For decades, your number was based mostly on your history with payments on things like credit cards and loans.

Now, two changes are coming that might affect the way your score is calculated.

For the first time ever, consumers can grant one of the scoring agencies access to their online bank accounts for a look at their bill-paying history.

The first change, Experian Boost, can potentially get you a higher credit score based on your internet, utility and cable bill history. This is optional, meaning you can decide whether you want the credit agency to have acess to your bank account.

...

The second program, Ultra Fisco, focuses on your checking and savings accounts. This gives lenders a better idea of how you're managing your finances overall and can help if you have some savings, but are on the verge of getting denied.

[secretlyevil]

Uh...no

[goldengirlz]

I think this could potentially be a positive thing for people who don’t have a lot of credit history but have been responsible financially in other aspects of their lives.

It’s optional so I can’t get too upset about it. Lenders already look at A LOT of financial data, including bank account history, to make credit decisions so this seems similar.

[tripleshot]

Nope. And what if you have multiple accounts at different banks? I’m not giving out all that info.

[Deleted]

When I read the article my brain read it as Ultra Fiasco, which to me is what this could become when one of these agencies is hacked.

[05heel]

Seems like a good way to boost credit for people who haven't been able to via traditional means. And we know who those people often are and why they don't have traditional lines of credit.

I wonder if the "boosted" score will carry the same weight as one from someone who hasn't opted into this. If not, I can see that as another way to discriminate, which could defeat the purpose.

[aprilsails]

My credit score is great so I would never give the agencies access to this information.

My Brother on the other hand has absolutely no credit history but does pay utilities, rent, and has a bank account. This could make a major difference for him.

[abs]

I think I'm okay with this. It's not mandatory, right?

It would have helped my mom get a better interest rate when she bought a house after my parents divorced and she had no credit to her name. It gives people options which isn't a bad thing IMO.

[candreco]

Feb 21, 2019 12:42:57 GMT -5 @princessbubbleyum said:

When I read the article my brain read it as Ultra Fiasco, which to me is what this could become when one of these agencies is hacked.

That's how I read it too, maybe not the best choice of names.

In general though, this does seem like a good way to help people with limited credit history.  As long as it is used the same way traditional scores are, and people had the ability to opt back out if they choose.

[karinothing]

Don't they have access to most of this anyway? I thought that utilities typically ran credit checks, which would make me think that the are on the credit report? Although I can't honestly remember what is on there.

[lemoncupcake]

Feb 21, 2019 13:16:37 GMT -5 karinothing said:

Don't they have access to most of this anyway? I thought that utilities typically ran credit checks, which would make me think that the are on the credit report? Although I can't honestly remember what is on there.

they check your credit to determine the risk in giving you an account, but they don’t report every successful payment you make the same way that it would be reported for a loan or credit card payment.

[karinothing]

Feb 21, 2019 13:29:51 GMT -5 lemoncupcake said:

Feb 21, 2019 13:16:37 GMT -5 karinothing said:

Don't they have access to most of this anyway? I thought that utilities typically ran credit checks, which would make me think that the are on the credit report? Although I can't honestly remember what is on there.

they check your credit to determine the risk in giving you an account, but they don’t report every successful payment you make the same way that it would be reported for a loan or credit card payment.

Ah, but they would report if you didn't make payments right? Like when it goes into collection?

[prettyinpearls]

All of our utilities/phone/etc are in my H’s name, but I’m the one who pays the bills from our joint account. So, in theory, he’d benefit the rewards of my excellent payment history on his behalf. He has great credit so this is a non-issue for us, but it was the first thing that came to mind.

[isabel]

Feb 21, 2019 12:43:45 GMT -5 05heel said:

I wonder if the "boosted" score will carry the same weight as one from someone who hasn't opted into this. If not, I can see that as another way to discriminate, which could defeat the purpose.

This is what I was thinking too. If they carry the same weight, no matter how they’re calculated, I think this opens up a lot of options for people. And since it’s optional, I’m not going to get too worked up about it.

I will say that I’m not comfortable providing them access to my bank account, but I don’t really have any objection to, say, Comcast providing them with a payment history.

[lemoncupcake]

Feb 21, 2019 13:36:16 GMT -5 karinothing said:

Feb 21, 2019 13:29:51 GMT -5 lemoncupcake said:

they check your credit to determine the risk in giving you an account, but they don’t report every successful payment you make the same way that it would be reported for a loan or credit card payment.

Ah, but they would report if you didn't make payments right? Like when it goes into collection?

i believe so - so in that case where you don’t have any available lines of credit but are paying utility bills, it’s all risk and no reward from a credit score perspective. You can be financially ruined by your score crashing if it goes into collections, but you get nothing positive for paying your bill consistently.

[hopecounts]

Feb 21, 2019 12:43:45 GMT -5 05heel said:

I wonder if the "boosted" score will carry the same weight as one from someone who hasn't opted into this. If not, I can see that as another way to discriminate, which could defeat the purpose.

I suspect it will DH is in the industry and in general he hates when a weak Credit Score blocks him from giving a loan to someone who is a good candidate but just doesn’t have a credit history.

He will love being able to use this.

At least for him he is far more interested in getting good loans through then anything else.

[ESF]

The Boosted one sounds like a good option in theory, but I’m not sure how much help people excluded from traditional credit markets.

People without strong credit histories may not be able to set up those accounts to begin with because of their credit histories

In households with more than one adult, there won’t be multiple utility, internet, and cable bills. People living with roommates or other adult family members just aren’t going to have the same number of these bills as everyone else.

Many households don’t even have these bills. Students in dorms won’t have these bills. Renters may have landlords covering utilities. Not everyone can afford cable or internet at home. Many low income people live in digitally redlined neighborhoods and can’t even buy reliable internet.

Also people generally don’t have contracts with the credit reporting industry. That means people who have their info stolen or have mistakes on their reports can sue to enforce their rights, and can participate in class actions to go after discriminatory practices. I’m sure that by signing up for these agreements, people will be giving up those rights and agreeing that all disputes will be heard in individual arbitration so consumers will lose the ability to sue to hold them accountable for leaking their banking data or engaging in systemic discrimination.

I suppose the devil is in the details, but I am not giving the credit reporting industry the benefit of the doubt on this.

[ESF]

This strikes me a classic example of an industry trying to prove they can self-regulate so the government doesn’t try.

[debatethis]

Feb 21, 2019 12:42:57 GMT -5 @princessbubbleyum said:

When I read the article my brain read it as Ultra Fiasco, which to me is what this could become when one of these agencies is hacked.

Again. When one of these agencies is hacked again. Because Experian, TransUnion and Equifax have all had major breaches...and NONE of them followed proper SOX/compliance protocol for reporting after it happened, either.

[aurora]

After a bad experience trying to get false info removed from my report about 20 years ago, I don't trust any of the credit scoring agencies (even though I have excellent credit now).

Is it really that hard to believe that I didn't have multiple addresses and multiple middle initials all at the same time when I have a common first and last name?

[Michelle]

I'm watching the handmaid's tale right now. There is no way in hell i want to consolidate even more of my financial information in one place thankyouverymuch.

I know. Paranoid. Not realistic. But dayum the book was troubling but seeing it played out on screen is bothering me even more.

[secretlyevil]

I should give a legit response that the immediate "uh...no" I did yesterday. After all the security breaches, I am even more paranoid about providing access to our bank accounts. My H and I almost exclusively use our credit card and only rarely use the debit cards. I am hearing way too many horror stories these days about identity theft and people's accounts being compromised and the difficulty in getting their money back. If providing these companies access can help someone better there credit score, so be it. Had this happened when I was younger when my credit score was less than ideal, I probably would have been singing a different tune.

[VillainV]

It’s good that they’re trying to give options to people who don’t have good credit scores by traditional metrics, but it upsets me that people will have to forfeit privacy in order to access that opportunity. Especially when that information can be gained without giving up access to their bank account.

[penelope]

When H and I tried to purchase our house we were denied by the mortgage company because we had no credit cards. His truck loan had been paid off for a couple of years and mine had about 6 months of payments left. That was all that was on our reports and it wasn't enough. We just didn't like the feeling of debt so we saved through out the years for the items we wanted. We had $32K in savings, specifically for a down payment and closing costs, etc. None of it mattered. We had to take a 7 year balloon out, procure credit cards and work to create a credit history for three years before we could refinance and take out an actual mortgage. We thought no debt was a good thing but in reality it's not. I get it...there was no record of on time payments, and what else have they got to judge on? So I could see how this could really help idiots like us that didn't understand a credit card is essential to a positive credit history.

[mouse]

Feb 22, 2019 9:46:54 GMT -5 VillainV said:

It’s good that they’re trying to give options to people who don’t have good credit scores by traditional metrics, but it upsets me that people will have to forfeit privacy in order to access that opportunity. Especially when that information can be gained without giving up access to their bank account.

Yes. I don't trust the credit score companies. Supposedly this is voluntary, but how voluntary is it when your credit score has so much power in your life (well beyond just securing loans)? And the potential of a breech or breech in privacy is huge.

[05heel]

It’s kind of silly to go on about not trusting the credit score companies at this point. We all have scores, they have our asses over the proverbial barrel, and that horse has left the barn a long time ago.

[downtoearth]

I hate the credit scores get so much weight in lending, but I also don't know how else an institution would have any metric to assess if you are a risk or not to lend to. That being said, I think this is a good change. My STBX doesn't have his name on either of our houses or our past car loans b/c he just didn't have any credit scores in 2 of the 3 companies - he isn't the most responsible, but not horrible and generally pays all non-medical bills on time. He did have a couple medical bills that went to collections, so he had one bad score for medical bills and no good credit b/c he paid for everything directly and didn't have student loans. This would have helped to have him show that he was responsible enough for a score and could have gotten him on our house/car loans.

It's crazy that you have to have credit to get loans, but you can't get credit cards and loans without reasonable credit.

[cosmowife]

How is this any different than giving access to programs like Mint?

[cville]

Ultra Fisco would be a good name for a band.

[cville]

Feb 22, 2019 12:53:51 GMT -5 cosmowife said:

How is this any different than giving access to programs like Mint?

Seriously. My identity has been stolen TWICE. Once when my doctor's office was hacked and once after that, which probably relates back to the first hack. I haven't stopped going to the doctor.

If this helps people, good.