Are UltraFICO & Experian Boost Solutions For Your Credit Challenges?


Are UltraFICO & Experian Boost 
Solutions For Your Credit Challenges?


Ever since the announcements regarding the new
credit scoring systems "UltraFICO" and "Experian 
Boost" were made last year (and their subsequent 
implementation earlier this year), questions regarding their 
use, legitimacy, accuracy, and abilities have come my way ...  

In most instances, the 
questions come from 
those considering 
home buying or
refinancing but
suffering from credit 
scores considered 
"fringe" or low scores 
... either as a result of 
NO/little credit or credit issues having occurred.  They're 
looking for answers and fixes for the challenges they face.

And challenges do exist.  While FICO reports that, for the
first time since tracking these stats, the average national 
FICO Score has reached the 700 threshold (in actuality, 704, 
an increase of around 10 points above the score reported 
prior to the housing recession that began in 2006), credit 
remains of great concern for many home buying prospects. 

Why? 

Prospects know credit scores will weigh heavily in their
upcoming mortgage search.  They will dictate what mortgage
options are available to them, what mortgage costs they'll
face, the interest rate offered, and ultimately ... Mortgage 
Approval itself.  So opportunities and methods to increase
credit scores are obviously of great importance and interest.

Along comes UltraFICO and Experian Boost.  They've
caught these hopeful homebuyers' attention, as each declares 
they have the ability to establish or raise credit scores for 
their customers.  But can they truly deliver on their
promises?  Let's do some examining ... 

Below is some information you should have at your disposal
prior to making a decision to use their services or not:

With UltraFICO ... 
  • UltraFICO is a free service
  • UltraFICO influences Experian-based Credit Scores only
  • Customers must "opt-in" to UltraFICO
  • Clients link their Checking, Savings or Money Market Accounts (customer choice) to the service  
  • To link and access their banking info/data, customers must use Finicity (an account aggregation company/app
  • The account data/info chosen by the customer contributes to their UltraFICO score  
  • UltraFICO only works with certain FICO algorithms
What UltraFICO considers during its scoring: 
  1. Evidence of customer's consistent Cash on Hand
  2. History of positive account balances
  3. Length of time customer's Account(s) have been open 
  4. Recency/Frequency of client's Bank Transactions
  ... or basically, a client's "money habits".  

It's important to point out:  An UltraFICO Score does
NOT replace a FICO Score.  

With Experian Boost:
  • Experian Boost is a free Experian service
  • Customers must "opt-in" to Experian Boost, which means they must sign up for an Experian account 
  • By opting-in, customers agree to let Experian connect to their online bank account to track the utility and telecommunication bill payments they choose  
  • Finicity must be used for Experian Boost to access account info/data
  • Experian Boost influences Experian-based Credit Scores only
  • Signing up for Experian Boost gives you free access to your FICO Score from Experian (not Equifax or TransUnion)
  • When "opting-in", customers grant permission to Experian Boost to seek online banking data/info on:
  1. Telecommunications Payment Data       
  2. Utility Bills Payment Data
   ... in both cases, the customer must confirm the data
received.
     
Sounds great, doesn't it?  Well yes, maybe, and no ...

For those seeking to establish credit or repair
severely damaged credit, these two credit-boosting
services may serve a purpose.  (Although as a Mortgage 
Originator, I maintain that credit can be easily established 
or repaired via other methods.  See below. 

For those that find themselves in these scenarios and also
thinking of utilizing either service, remember to always ask 
the following before applying for any new credit, "Do you 
report to the Credit Bureaus?" 

Your goal is to have that new credit reflected in your Credit 
Report, so proceed with any new credit application according 
to the answer you receive.  (Pass on applying if they cannot 
answer this question definitively.)  If you decide to move 
forward with an application, be aware that your new credit 
will typically start to show on your credit report within 30 
days of the close of the account's billing cycle.  

Now it's important to point out at this time:
Differing algorithms and
scoring models for credit 
scoring exist.  Debt.org 
reports that FICO alone "has
more than 50 different
versions of your score that it
sends to lenders. The score
may change, depending on
what company asks and 
what was important to that
company in calculating your 
score".  Other models exist too.  Scoring models, such as 
VantageScore and Community Empower, and are also 
being used by companies.

That's a lot of information.  But what does it all mean for
consumers?  

Well first, it means the credit score that you receive
from your credit card company ... (think Discover, Visa, etc.
can be quite different than the credit scores received and 
used by your bank for an auto loan.  Different scoring models 
reap different credit scores. 

And let's go a few steps further.  The credit scores referred to 
in the above paragraph?  Those credit scores can also be 
different from those utilized by your insurance company, 
telecommunication, and utility companies, etc.   And they're 
all going to be different than those used by most mortgage 
lenders, as that algorithm and scoring model is specific to
the mortgage industry alone. 

While doing some research for this article, I ran 
across a statement regarding Experian Boost, made by 
the Experian credit bureau themselves.  I thought it pretty 
interesting and revealing.  

In that statement, Experian said, Only positive payment 
histories will be aggregated through the (Experian Boost) 
platform and consumers can remove the new data at any 
time.”  

In other words, customers choose the accounts they want to
 link and report to Experian Boost.   It's only natural to 
assume that customers will choose only those accounts that 
reflect well on their finance/credit choices and ultimately on 
their Credit Scores.

But Mortgage Lenders want and require a more
complete and thorough picture of an applicant's credit at the 
time of their mortgage application and underwriting.  That 
means negative info along with positive info must be
received and vetted.  

To that end, Mortgage Lenders typically request what is
called a "tri-merge credit report" or Residential Mortgage 
Credit Report (RMCR) for mortgage applicants.   This tri-
merge report takes the data provided by the three (3) major 
credit bureaus  (Experian, TransUnion, and Equifax) and 
merges it into one single report.  That report provides a 
thorough and detailed picture of the applicant's entire credit 
history including their credit habits and how they've utilized 
their credit in the past.  

Currently, neither UltraFICO nor Experian Boost is
acknowledged by all algorithms, including that used by 
Mortgage Lenders.  That's a big problem for those hoping to 
buy and finance (or refinance) a home now or in the future. 

So what should you do if you're in need of reliable credit info
or assistance?  If you hope to establish or improve your 
credit scores?  

The answer is fairly simple:  Seek the guidance and 
assistance of an experienced mortgage lender. 

Doing so is a wise decision whether your goals include home 
buying or not, as a mortgage lender can provide you sound 
timely advice that will help you establish and/or improve 
your credit and credit scores both in the short and long 
term.  And best of all, their service is typically provided at no 
charge.  

I think it's never a bad thing for anyone to seek information
and opportunity to improve upon their finances or credit 
scores.   I applaud that heartily.

But until the benefits reaped from UltraFICO and 
Experian Boost are more inclusive to a wider range of credit 
scoring models and algorithms, neither may provide the 
results a consumer really needs or is ultimately hoping for ...

 
 
*  Hoping to establish good credit? Have credit questions? 
 
Or are you dreaming of buying or refinancing a home or Investment Property in New Lenox - Will County - Chicagoland - IL/WI
 
Contact me today!  I'll put my 40 years of mortgage experience and expertise to work on your behalf.  I'm easily found at: 
 

Gene Mundt
 
Mortgage Originator  -  NMLS #216987  -  IL Lic. 031.0006220  -  WI License #216987
 
American Portfolio Mortgage Corp.
 
NMLS #175656
 

 
Direct:  815.524.2280
Cell:  708.921.6331
eFax:  815.524.2281
 



Twitter Account of Gene Mundt, Mortgage Lender   LinkedIn Account of Gene Mundt, Mortgage Lender   Facebook Acct. of Gene Mundt, Mortgage Lender   Pinterest Acct. of Gene Mundt, Mortgage Lender 
 
     Gene's Chicagoland Blog/Gene Mundt, Mortgage Lender  


Gene Mundt, Mortgage Originator, an Originator with 40 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:  Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in
Chicago and the greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL & WI.  

Your Referrals & Testimonials are Greatly Appreciated!

The Weekend is Coming. Do You Have Plans? Those Plans Should Include Checking Your Credit



The Weekend is Coming. Do You Have Plans? 
Those Plans Should Include Checking Your Credit



The weekend is coming ... do you have plans?  Silly question, I know.  

Even if you already have a boatload of activities on your calendar, carve out enough time to add one more important activity.  

Check your credit and credit scores!


It only takes a couple of minutes to request your free Credit Report on  annualcreditreport.comYou fill out a simple form and "viola"!  It's really pretty easy peasy.  

While this one simple act is accomplished quickly and easily, it's well worth doing as it reaps you long-term benefits.  So once your busy weekend is behind you and you have a bit of downtime, make sure to take that time to sift through the valuable information received within your free report.  

Take special note of this information:

     1.  Your personal info, Social Security Numbers, Date of Birth, Full EXACT Name, and Address

     2.  Your credit rating  

     3.  ALL your credit accounts.  Are they being reported?

     4.  Are any late/missed payments showing? If so, what is the true status of these accounts? 


But ... what if you're someone that has NO credit lines or little credit being reported?  What if you wish to establish credit and credit history?  What then?

There are some simple steps you can take to accomplish that.  Those are:

  • Open up a Credit Card (known as revolving debt) with a modest borrowing limit. 
       Major retailers and gasoline companies are two (2) good examples of this type of debt. (Make sure prior to taking out new credit or initiating a new credit card, that the company utilized reports to the Credit Bureaus)
  • Use the newly-established credit card by charging purchases within your budget constraints.  Pay the balance on time and in full each month.
    I recommend that first-time credit users open only one or two credit lines, to begin with. Take small steps. Learn to handle your credit wisely. Crawl before you walk. 
  • Consider using a co-signer to establish a credit account. Lenders consider the co-signer's credit as existing credit.  

    (Note: Co-signing is not without risk, so consider this action carefully prior to doing it.  Also:  Make sure the co-signer involved has a long good credit history)
  • Open a "secured" account" with a credit union or credit card company or other company that allows it.  The bank where you keep your savings and checking account is typically a great option.   
      What's a Secured Account?   A "secured" account" is one where a deposit of cash (such as $250, $500, $1,000) is made with the credit company, as collateral for a credit card.  When establishing this type of card, you essentially "pledge" an amount ($500 - $1,000), then repay the bank or credit company over 12 regular installments to pay that amount off.  
      Of Note:  Secured Accounts can also be very helpful for those that suffered through a Bankruptcy or Foreclosure or had other credit issues in the past.

I must point out here ... if you hope to become a home buyer soon or in the future ...

As a rule, the establishment of 2 (sometimes 3) forms of trade-line/credit such as Revolving and Student Loans will be needed prior to applying for Mortgage.  Underwriters and Mortgage Lenders will ask that you:

  • Provide concrete evidence proving that you have the current ability to make payments on the Mortgage for which you are applying 
  • Provide proof in the form of a Credit Report that you have a "documentable history" of honoring your credit obligations.  Timing is everything in this regards. 

Take those steps to establish credit cards and credit history well in advance of applying for a  Mortgage, as it can take up to 6 months of payment history to build a credit score or improve existing ones.  Lenders need a significant credit "storyline" to follow during your Underwriting Process.

And remember, once your credit has been established, all credit card balances should be maintained well below the Maximum Credit Limit.  (30% is optimum.  50% maximum, including finance charges.)  Most importantly ... make all your payments on time!

Act proactively regarding this issue if you hope to buy.  Reach out to me as soon as you make your home buying decision.  The info and assistance garnered will prove extremely beneficial at the time of your purchase/mortgage application and save you money. 

Whether renter, future home buyer, or just beginning your credit story ... it's important that you review your credit and credit scores, at minimum, once per year.  There'll be no better time than now, this weekend ...



*  Hoping to establish good credit?  Have credit questions?  Or are you dreaming of buying or refinancing a home or Investment Property in New Lenox - Will County -  Chicagoland - IL/WI

Contact me today!  I'll put my 40 years of mortgage experience and expertise to work on your behalf.  
I'm easily found at: 


Gene Mundt

Mortgage Originator  -  NMLS #216987  -  IL Lic. 031.0006220  -  WI License #216987

American Portfolio Mortgage Corp.
NMLS #175656


Direct:  815.524.2280
Cell:  708.921.6331
eFax:  815.524.2281
 


Twitter Account of Gene Mundt, Mortgage Lender   LinkedIn Account of Gene Mundt, Mortgage Lender   Facebook Acct. of Gene Mundt, Mortgage Lender   Pinterest Acct. of Gene Mundt, Mortgage Lender 
 
     Gene's Chicagoland Blog/Gene Mundt, Mortgage Lender  


Gene Mundt, Mortgage Originator, an Originator with 40 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:  Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in 
Chicago and the greater Chicagoland region, including:  
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL & WI.  

Your Referrals & Testimonials are Greatly Appreciated!
  

Are UltraFICO & Experian Boost Solutions For Your Credit Challenges?

Are UltraFICO & Experian Boost  Solutions For Your Credit Challenges? Ever since the announcements regarding the new credi...