Many have asked us about the new UltraFICO™ algorithm that allows for you to connect your bank account to Experian so they can increase credit scores based off of account balances and payments to utilities, cell phones, and rent.
Experian is offering this as a free service, which is our first warning sign. The credit bureaus are a 10 billion dollar industry annually. In 2018, Experian itself generated $4.662 billion in revenue. The credit bureaus typically don’t offer free services unless it sees that they can gain from it.
So what does Experian have to gain by reporting your payments for free and increasing your scores? They gain by you qualifying for debts that you didn’t normally qualify for. If you didn’t qualify for a car loan or credit card, the credit bureaus only get paid for the inquiry of the credit report. However, if you now connect your bank account via
UltraFICO™ and get a qualified score for a credit card/car loan….the credit card/car loan will now report positive and negative credit history every month. Thus in turn getting the credit bureaus paid every month that the credit card/car loan reports to the credit bureaus.
UltraFICO™ is only beneficial for the FICO 8 algorithm. No other FICO algorithms are acknowledging this currently. The mortgage industry specifically uses Beacon 5.0, Classic04, and FICO V2 which will not see any point gains by connecting your bank account via UltraFICO™.
We cannot confirm this is the only reason why Experian is doing this, but very rarely does the credit bureaus do something out of the kindness of their heart.