America's credit bureaus haven't exactly covered themselves in glory when it comes to protecting your private data. So you might be skeptical about two new credit-enhancing products that require access to your bank accounts.
Experian and credit scoring company FICO introduced UltraFICO last year as a way to elevate credit scores based on how people handle their checking, savings or money market accounts.
UltraFICO currently is in a pilot phase and expected to be more widely available this summer. The credit bureau also launched Experian Boost, which allows people to add on-time cellphone and utility payments to their Experian credit reports. The positive bill payment history can add points to certain credit scores, but people have to link their bank accounts so Boost can scan for those payments.
Both free products are aimed at people with "thin" credit reports — which Experian defines as having fewer than five credit accounts — and UltraFICO may help those with damaged credit, as well.
A matter of trust
Both products get bank account information from data aggregator Finicity, which promises "bank-level security," including "best in class" third-party security certifications and regular audits by internal and external teams.
"All data is encrypted throughout the process, from data entry to data transmission to data at rest," says Finicity CEO Steve Smith. "Data at rest" refers to bank account information that must remain in a database for at least seven years for regulatory reasons.
Granted, Experian is not the credit bureau that suffered a massive breach two years ago — that was Equifax. But in 2015 Experian reported a breach of names, addresses, dates of birth, Social Security numbers and driver's license numbers belonging to more than 15 million T-Mobile customers. And last year Experian's site exposed the personal identification numbers needed to thaw credit freezes.
You don't have a choice about being in a credit bureau database. But with bank accounts, you typically still have the option of choosing who gets access.
Not for everyone
Boost and UltraFICO offer the tantalizing prospect of more credit score points instantly, but it remains to be seen how many people will actually benefit.
You'll probably want to pass on Boost if your credit is good. Your scores might creep up only a few points, or none at all. It is aimed at people with bad-to-fair FICO scores of 580 to 669. Even then, Experian says only 5 percent to 15 percent of the Boost users who saw any increase had a big enough jump to move them up a whole category (from bad credit to fair, or from fair to good).
UltraFICO, meanwhile, targets people with scores from the high 500s to the low 600s. Those most likely to benefit keep a cushion of at least $400 in their bank accounts and never let balances drop below zero. If your bank account is constantly on fumes or dips into the red, you are unlikely to see improvement in your scores.
BETTER WAYS TO BUILD CREDIT
You typically can build your scores at all three bureaus by:
- Being added as an authorized user to someone else's credit card.
- Using a credit-builder loan, offered by many credit unions and at least one online lender.
- Using a secured credit card, where the credit limit is typically equal to a deposit made with the issuing bank.
Before you hand over more data to a credit bureau, you should be confident you don't have better options — and that the benefit is worth the risk.