Picture newlywed and honeymoon-bound George Bailey walking into the Bailey Building and Loan with his picture-perfect wife Mary, hard-earned $2,000 in hand. Now see him lending his friends and neighbors all of those dollars to keep the good old Bailey Building and Loan afloat when there was a run on the bank.
Fortunately, George and Mary had a community of loving neighbors to help them out of a financial crisis. If they needed help today, however, they’d soon realize that modern financial institutions no longer see you as a human with feelings and needs. Instead, you are really just a number to them — an easily packaged number known as your credit score.
If you want a wonderful life but find your credit score not properly representing your current financial reliability, there are some credit impacting tools you should know about: Experian Boost and UltraFICO. In this article, we are going to discuss their similarities and differences, as well as help you understand which is best for you.
Credit building is hard. Whether you are doing it for the first time or you are rebuilding, it’s still a struggle.
“Luckily,” says Ivan Chong, Founder of Lazy Finances, “new methods are being introduced such as Experian Boost which gives you credit for paying your utility bills and UltraFICO which looks at your bank account transactions and balances. These both give positive boosts to people with no credit or bad credit, enabling them to start building their credit responsibly.”
Helps with borderline credit
Both of these products are aimed at these two groups: consumers with subprime scores and consumers without enough credit to be scored. They are especially helpful to borderline credit consumers in the 500s and 600s. Experian Boost is a way to boost your credit score and UltraFico is a new scoring model. Despite their differences, they are both helpful tools that consumers with thin credit files should look into.
Another similarity is that they’re both free. Consumers will have the opportunity to opt-in to each program, for free. We are talking a free boost to your score.
Incentivizes responsible credit behavior
Both products aim to help fringe consumers. They take into account responsible bill payments, as well as spending and saving behaviors. It’s about time someone incentivizes good behavior that shows you are more than just a number. You just have to sign up to get extra credit.
Experian Boost and UltraFICO should be helpful to the fringe customers, but they are clearly not the same thing. Most notably, they differ in their application and usage.
The first difference between Experian Boost and Ultra Fico is in their application. One is a boost to your existing FICO score and the other is a separate brand new scoring model, administered by Experian.
Experian Boost is an opt-in program from this top CRA that can use on-time utility and telecom payments, as saved and reported in your existing online banking account, to boost your existing score. Signup is free, and it only takes about five minutes. It’s really an opportunity for people with borderline scores to become scorable or have an increase to the next bracket. Seventy-five percent of consumers with scores of less than 680 saw an improvement. Additionally, 10% of unscorable or thin-file customers established enough data points to become scorable. FICO has lots of scoring models. However, in some cases, they tend to overlook fiscally responsible consumers without much credit history.
UltraFICO is an opt-in scoring model that uses bank transaction data, in partnership with FICO, Finicity and Experian, from a checking account, savings account, or money-market account to your advantage. It uses data that isn’t normally reported to CRAs to give an opportunity to have a better score. It considers higher average account age, consistent account use, positive consistent cash on hand balances, without overdrafts, evidence of savings and regular, timely and non-debt bill payments. In a study, 70% of people with $400+ in savings and zero overdrafts for three months saw an improvement.
Another difference between these two programs is their accessibility. While both aim to help fringe customers get better access to credit and require consumers to verify their bank account data, they aren’t accessed in the same way.
Experian Boost is live and available for signup online. Users will be able to verify which payments get counted in the Boost process and which don’t. You have to sign up for Experian membership, but it’s free and not just a free trial. No credit card is needed.
UltraFICO is newer. It is currently in a limited pilot program phase. Lenders may soon offer consumers the option to opt-in to the scoring model as a part of their account access. This score comes into play if your FICO score gets denied. In that event, you can ask the financial institution where you are applying for your UltraFico score to be pulled. This score, according to your extra information that has been added, allows you to score higher and get easier access to credit.
Significantly, both of these products aim to help out the same customer group. While Experian Boost can give you a real-time boost to your FICO score, UltraFICO can be your second in a duel for a new loan. It’s got your back, just in case your standard FICO score pulled during an application process isn’t quite up to snuff. You can ask that your UF score be pulled, as long as you have opted-in.
Which one is right for me?
Clearly, Experian Boost and UltraFICO are both meant for consumers with less-than-ideal credit. However, they are different products with different applications. In some ways, the differences can limit how effective they can be and which is in your best interest. To help understand which is best to help you build a wonderful life, here are a few things to think about:
First, what’s your credit score?
Experian Boost is best for anybody on the fringe who has automatically recurring payments coming out of their bank accounts to phone companies or utility companies. Since these are the factors that the program is looking for, you might want to start setting up recurring payments and then sign up.
UltraFICO is best for people with a history of consistent savings or cash-on-hand in their bank accounts of $400, going back several months. If you don’t have that, or you have a history of overdrafts on your account, this may not help you at all. It is more geared towards the fiscally responsible consumer who manages money wisely, but for lack of need or availability, hasn’t got fully established credit within the last six months.
And while it may not contribute to the angel population, every time an autopay alert rings, your credit could be on the upswing.
Anne-Marie Hays is interested in personal finance, for her own benefit and for helping others. She loves reading, traveling, and watching The Office. She writes for BestCompany.com, where she manages loan and personal finance content.