Slated for 2019, UltraFICO model could widen pool of borrowers overall, but homebuyers seeking mortgages backed by Fannie and Freddie won’t have access for years.

A new credit score that could improve mortgage eligibility for millions of borrowers won’t lend a helping hand to a substantial number of prospective homebuyers anytime soon.

FICO, the provider of credit score models used by many mortgage lenders, announced UltraFICO Score last week, with a company executive hailing it as a “game changer.”

The new model can generate higher credit scores for borrowers by factoring in data from checking, savings and money markets accounts — information that has traditionally been overlooked. The score will launch as a pilot program for lenders in early 2019.

It’s almost like a “second-chance score,” David Schellenberg, senior director of scores and analytics at FICO, recently told NerdWallet. The score, he added, has the most potential to benefit borrowers with little credit history and those who are trying to improve their scores after a financial crisis.

Borrowers can apply for an UltraFICO score by granting permission to contribute information from banking statements, such as the length of time accounts have been open, frequency of activity and evidence of saving. Working in tandem with FICO, that data can be read by Finicity and mixed with credit information from Experian “to provide an enhanced view of positive financial behavior,” FICO said in a press release.

The score could improve credit access for the majority of Americans and would be especially useful to those “who fall in the grey area in terms of credit scores (scores in the upper 500s to lower 600s) or fall just below a lender’s score cut-off,” according to FICO.

“It also enables a deeper dialogue between the consumer and lenders to help both parties make better financial decisions,” Jim Wehmann, executive vice president of Scores at FICO, said in a statement. “It’s a game changer.”

The score is set to be broadly available to lenders in mid-2019. About four million consumers could see a 20-point increase to their credit score under the new model — which could allow some consumers to qualify for mortgages that would otherwise be denied to them, HousingWire reported.

But despite all the buzz, the score’s applicability in the mortgage space will remain highly restricted for the foreseeable future.


Because mortgage lenders will not be able to use UltraFICO for underwriting mortgages backed by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that back a vast swath of American mortgages.

In July, the Federal Housing Finance Agency (FHFA) the agency that oversees Fannie and Freddie, postponed its search for alternative credit scoring models that could be used by lenders originating mortgages backed by two firms.

The agency said at the time that it was shifting its focus to implement Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, a law enacted in May that requires FHA to “define through rule-making, the standards and criteria the Enterprises will use to validate credit score models.”

The search for a new credit score model was “duplicative of, and in some respects inconsistent with,” the work the agency was tasked with doing under that law. After the FHFA has fulfilled its rule-making obligations under the law, it will implement them.

This means a decision by the agency to approve new models like UltraFICO could be delayed as far out as 2020, HousingWire reported. For now, mortgage lenders reportedly will continue using Classic FICO for Fannie and Freddie-backed mortgages.

Email Teke Wiggin.

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