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UltraFICO: Ultra Ridiculous

If you’ve been around here for more than two seconds, you probably already know how we feel about credit scores. (Hint: They’re really dumb.) You’ll hear us say it time and time again: A credit score does not show how well you’re managing your money or even if you have a dollar to your name. Instead, it’s really just a score of how well you can play the debt game with the bank. Credit score? More like an “I love debt” score.

But what about the credit score’s shiny cousin, UltraFICO? The finance world brags about it as a way to empower consumers to get access to loans and credit—aka a way to keep them stuck in the cycle of debt.

What Is UltraFICO?

It’s ultra stupid, that’s what it is. Wait—we’re getting ahead of ourselves. UltraFICO is just another way a lender can check someone’s credit if they’ve been turned down for a loan or credit card based on their current credit score.

This credit scoring system hit the scene in 2019. It looks at the balance and activity of a person’s checking, savings and money market accounts. And depending on that status, UltraFICO might dish out a bump of 20 points or so to your usual credit score—giving you your new UltraFICO score. That could be just enough of a bump to mean that someone who wouldn’t have been approved for new debt would now be able to get it.

How Is UltraFICO Different Than a FICO Credit Score?

Let’s talk about how a credit score is calculated to begin with. Honestly, FICO keeps their cards pretty close to their chest on this one, so no one knows exactly how it’s factored. But what we do know is this: It’s about 35% your debt payment history, 30% the amount of revolving debt you currently owe, 15% the length of your credit history, 10% any new credit you take on, and 10% the types of credit you have.1

Say you’re going to open up a credit card or a personal loan. With the traditional method we all know (and love to hate), the lender would check your FICO credit score to see if you qualify. In the past, it’s been a simple “yes, you’re up to par” or “no, you don’t cut the mustard.”

But with the new UltraFICO option, if you’re denied, you can ask the lender to pull your UltraFICO score. That basically means you’ll be opting in to having the FICO powers that be dig into your checking, savings and money market accounts in order to try to get the boost you need to qualify for new debt.

How Is an UltraFICO Score Calculated?

This comes down to a couple of factors—and none of them have anything to do with debt. That might seem like a good thing at first, but don’t be fooled.

Your UltraFICO score is calculated using these things:

  • Length of time you’ve had your bank accounts open (checking, savings and money market)
  • Your activity in those bank accounts and how often you use those bank accounts
  • Proof that you have (some) cash in those accounts

On top of all that, UltraFICO looks for things like: Do you overdraft a lot? Do you have direct deposits from your paycheck? Do you make it a habit to save?

Now, that all might sound fine at first—until you find out what these people consider “savings.” That’s the real kicker.

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So, how much do you need to have stashed away in your bank account to qualify for an UltraFICO boost? Oh, about $400—and you have to prove you’ve had that amount of cash for several months in a row.2 You know, because that somehow means you’ll make the monthly payments on a credit card with a $5,000 limit (while the interest racks up). Because . . . math? It sounds ridiculous, and that’s because it is.

Is UltraFICO Good or Bad?

It’s sleazy. It’s shoddy. It’s sketchy. It’s just plain bad.

Oh, the things we hate about UltraFICO. Let’s count the ways:

1. It traps more people in debt.

While FICO and friends want you to think this new credit scoring method will help people by giving them access to credit cards and personal loans, we know better. Debt is debt. It hurts more than it will ever “help,” no matter how you slice it.

The UltraFICO system opens up the debt pool to an even wider group of people. That means people who might’ve been protected from adding new debt to their lives will now be approved and primed to be lured into the trap of debt. And that should make us all angry. Really angry.

2. Having only $400 in your bank account doesn’t equal financial security.

It’s hilarious to even think about dishing out a $5,000 credit line to someone with only $400 in their bank account. Is this what our society now considers stable? What in the world are they thinking? Hey, as long as there’s $400 in your bank account, feel free to take out that $10,000 personal loan to pay for a wedding or fund a vacation trip! You’ll clearly be able to pay it back. Say what?

There’s a better way! If you follow the 7 Baby Steps, you should have at least $1,000 saved in your emergency fund. Sorry, but $400 probably isn’t going to cut it when an unexpected emergency hits you. Depend on yourself to be financially secure, not a credit score.

3. Banks are going to make bank while you go into debt.

When it all boils down to it, this is just a fake way to raise someone’s credit score to make them “worthy” enough for credit cards and loans. And who profits from that? The banks and the lenders. They’re not stupid. They’re betting on the chance that people won’t be able to pay their debts in full each month so they can slap them with higher interest rates. See? Sleazy.

4. Loaning money to people who can’t pay it back is so 2008.

Hey, the 2008 housing crisis called and wants to know what the heck these guys are thinking. Didn’t we learn anything from what happened 14 years ago when people couldn’t afford the loans they took out on their homes?

P.S. Did you know you can get a mortgage without even having a credit score? All you have to do is look for a mortgage company that does manual underwriting. They aren’t unicorns—they do exist. Oh, and what’s manual underwriting? It’s basically just the process of making sure you’re a responsible human who pays their bills and has a job. Instead of relying on a credit score to “prove” you’re eligible to buy a home, they’ll check to verify employment, income and your payment history on things like utilities and rent.

Remember, there are other ways to prove you pay your bills that don’t require you to have debt.

5. Leaving yourself open to identity theft is an awful idea.

Okay, aside from all the other red flags here (and there are plenty), do you really want to give the powers that be access to your bank account? That opens up the flood gates to identity theft! While credit companies would like for us to believe they’re immune to threats like that, we all remember the huge data breach Equifax was a part of. You know, the one where 147 million people’s personal information was exposed.3 Yeah, that’s kind of a big deal.

What They Don’t Want You to Know: You Don’t Need a Credit Score

Despite what you’ve heard all your adult life, we’ve got news for you—you don’t need a credit score. Think about it! No matter what UltraFICO says, the only way to keep a good credit score is to go into debt and stay there. And that isn’t a solid plan for your money. If you follow our plan, get out of debt, and don’t take on any new debt, you don’t need a credit score. It’s as easy as that. Really.

As you pay off your debt (and never take it on again), your credit score will eventually end up being “undeterminable.” That just means there’s no credit information or history to report about you. Why? Because you have no debt!

So, how do you get by in life without having a credit score? It’s simple. And maybe even a little radical. Only pay for the things you need with the money you already have. A crazy thing happens when you stop owing people money: You get to actually keep the money you make so you can build wealth—not your credit score.

What Does the UltraFICO Score Mean for You?

UltraFICO impacts “subprime” borrowers the most (people who are looked at as a credit risk based on their history with debt). This group of folks would end up with higher credit scores thanks to UltraFICO. And subprime borrowers with a credit score in the 500 to 600 range would see the biggest bump when it comes to their new UltraFICO score (by at least 20 points).4

This means that a good chunk of people who weren’t able to take on debt (because of their not-so-great credit scores) will soon be able to open up credit card accounts and take out personal loans just by signing on the dotted line. Let that one sink in for a second.

If it sounds terrifying, that’s because it is.

And remember, these new borrowers are considered “subprime” borrowers for a reason. They’re hurting and already struggling with debt. So they can’t afford to take on even more debt!

Now, is it a good thing that lenders are actually looking at the ways people handle their money to judge their behavior and not just looking at their credit? Sure. Way to go banks and lenders! You’re actually thinking about people’s money habits instead of just how they interact with debt. But we still see right through you.

Lenders aren’t dumb. Approving credit card applications and personal loans for people they know will struggle to make payments just means one thing—more money in their pockets.

Bottom line? Don’t fall for this UltraFICO ultra nonsense. It’s a trap! Don’t let other people (especially banks and debt wielders) decide your financial score—ever. Not even if it’s packaged in a lipstick on a pig kind of way like this.

Are you ready to stop relying on debt to make ends meet? Learn how to handle money and get through life without loans or a credit score. (Yep, it’s totally possible!) Our proven plan Financial Peace University (FPU) will show you how to dump debt for good. So don’t wait around for the UltraFICO fairy to approve you for more credit. Start ditching debt and make a plan to build real wealth.

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Ramsey Solutions

About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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