Should Traditional Mortgage Lenders Adopt the UltraFICO Score?

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The UltraFICO credit scoring model is one of the latest recalibrations of the FICO system. Unlike many of the versions that came before it, it involves transactional bank data in hopes of painting a more accurate portrait of the creditworthiness of thin-file and bad-credit borrowers. Since it adds sensitive personal information into the equation, the UltraFICO score is consumer-permissioned.

In addition to using a company that offers customer service-centric income verification for a mortgage, adopting the fascinating FICO scoring model offers many promising benefits to your business. Below are the reasons why you should strongly consider joining its pilot program with Experian.

Extending Credit to Millions of Underserved Consumers

Let us begin with the most obvious: the UltraFICO credit scoring system can help expand your lending base. It is specifically designed to increase the scores of consumers with little payment history and bad credit. Although the risk is obvious, this model uses a mathematical formula that heavily weighs a consumer’s responsible banking habits, which can offset their questionable credit decisions in the past.

There are about 53 million Americans with inadequate credit data to merit an essential FICO score. The UltraFICO scorecard can help countless of consumers unlock mainstream credit options.

If you want to position your lending business for the unbanked, adopting the UltraFICO score is the first step to stake out your claim in this largely untapped market. It can also make your company more attractive to self-employed professionals, millennials, migrants, and many other marginalized consumers.

Providing Better Rates to “Transitional” Borrowers

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Apart from scoring the unscorable, the UltraFICO scoring model gives consumers who barely make it to the next credit score range up to a break. Many of them could qualify for better rates if only they have slightly higher credit scores.

The UltraFICO score can turn a poor-credit individual into a fair-credit one without necessarily increasing the risk of borrowing. The consumer’s bank transactional information can bring another dimension to their financial habits, which can positively impact their creditworthiness.

With a more compelling reason to offer more favorable interest rates without absorbing so much more risk, you can minimize your potential loss because your loans will be more affordable and more manageable.

Neutralizing the Edge of Fintechs Over You

UltraFICO score adoption is one of the simple ways you can innovate and be at the same level as your fintech peers. Ever since the Great Recession, the influence of fintechs in the industry has grown. Tech startups have been receiving massive venture capital investment to turn existing financial services on their head and develop new solutions without worrying about profitability too much.

As a result, fintech valuations exploded. After years of steady growth, fintech claimed the lion’s share of the unsecured loan market in 2017. They are poised to do the same in the unsecured loan sector unless traditional lenders do something to keep their slice of the pie from diminishing.

The UltraFICO scoring model could make a world of difference. It allows you to be instantly tech-driven since it uses predictive analytics and many other cutting-edge innovations to calculate more accurate credit scores.

Being one of the early adopters of an edgy credit scoring model is inconveniently risky, but the potential gains are tremendous. If you believe in what the UltraFICO score represents, then explore the possibility of integrating it into your business.

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