Is the UltraFICO Score the Best Way To Boost YOUR Credit Score?

Published on October 26, 2018 by Danielle YB VasonLeave a comment

A new credit scoring system, called the UltraFICO Score, is being introduced in the new year and it could mean a boost in your credit score, making it easier for you to get better rates for large purchases like a car or home. Launching in early 2019, this scoring system is designed to validate the score of consumers, but more importantly, it will be used to assess the willingness of consumers to share their personal financial data for a potentially higher score. By opting in and linking with your checking, savings or money market accounts, your UltraFICO Score enhances your credit score based on indicators of responsible financial behavior.

The model, developed by FICO, will be implemented through Experian and borrower data will be aggregated through Finicity. The UltraFICO score is slated to potentially boost the credit scores of 7 million people with financially savvy millennials in one of the best positions to take advantage of the new score system. The UltraFICO score isn’t for everyone, but it just may be a great tool for you.

Is the UltaFICO Score Right for Me?

According to the UltraFICO press release, “Experian, FICO and Finicity estimate this new score has the potential to improve credit access for the majority of Americans and is particularly relevant for those who fall in the grey area in terms of credit scores (scores in the upper 500s to lower 600s) or fall just below a lender’s score cut-off”. The process for applying for loans will remain the same, with loan providers checking your FICO score. If you are rejected from a loan based on your FICO credit score, you may request that they pull your UltraFICO which then takes into consideration the way you handle your physical money in your checking, savings, and money market accounts. If you make more deposits than withdrawal, have no bounced checks, maintain an average account balance and don’t have a history of overdrawn accounts, for example, then it may present you as more creditworthy than when considering your FICO score alone.

Again, this applies best to those who fall in the grey areas of credit scores.

Why the UltraFICO Score Could Be A Good Things for Millennials

Millennials are known for a lot of things, good and bad, but one thing I can say for sure, we learned a thing or two from the Great Recession of 2007-2008 when many of us were in college, graduating college, or in our first job right out of college. I mention this because that terrible time for the US economy taught millennials the importance of putting money aside in savings. A survey from Transamerica found that fully 39% of millennials are defined as “super savers” since they are saving more than 10% of their salary. That’s close to the 15% experts often recommend.

Millennials have delayed several life milestones, like buying a house, because student loan debt is factored into one’s credit score. Now, if someone were to opt-in to the UltaFICO Score for consideration when trying to be approved for a mortgage, it may be into their best interest to leverage their checking and savings account data to access more lending options and better terms. Especially when the access to one’s financial data supports the super savers finding from the Transamerica survey.

Why I Don’t Believe the Hype of the UltraFICO Score

There are several scenarios where I can see the UltraFICO Score as a smart money move, especially for those who are looking to secure an affordable mortgage. If leveraging your data can help get you approved for a mortgage or even a lower interest rate, then by all means, make that smart money move, girlfriend. Like I said earlier, it isn’t for everyone but it just may be the measurement tool for you.

Personally, my mind flagged some of the language used in the UltraFICO Score press release and on the FICO website and my spidey senses (also known as my intuition) were tingling. Both the press release and the website used basic persuasive writing techniques by infusing the announcement with positive power words like “empower” and “control” to give consumers the feeling that they are in control of their own credit score destiny. Yes, in theory, you are in control of your credit score, but sometimes past decisions and life circumstances are a more powerful reflection of why your credit score is what it is. I interpreted FICO’s declaration stating, “you are in control of your credit score” to mean that if you choose to opt-in to this new scoring model then you are controlling the boost that your UltraFICO score may reflect.

The thing is, rarely do we get something for free. In this instance, this consumer empowerment message that you are being sold is for the bartered price of your personal financial data. In a world where personal data is just as valuable as money, if not more, it makes me wonder if we as consumers are being blinded by the smoke and mirrors of a better credit score. Just think of how much your financial data is really worth if they are willing to give you a little credit boost in exchange for it.

Only time will tell how this will really impact the scores of those who decide to opt-in. As more information is available, the questions that many of us have will hopefully provide more insight in deciding which score, FICO or UltraFICO would be best for you.

Examples of Sinking Funds from Personal Finance Blog, She Makes Cents

The Beginners Guide to Sinking Funds & Why YOU Need One

Published on March 29, 2018March 30, 2018 by Danielle YB Vason8 Comments

This year, I have vowed to be BETTER with my financial decisions. In order to improve my behaviors and cultivate better money habits, I had to first take a look at areas where I need to focus on for improvement. After the Mr. and I had to take $7000.00+ out of our savings to pay for a new roof and chimney repair on our rental property, I knew there had to be a better way for us to prepare for situations like this. That 7K loss from our savings put a dent in that account and exposed a financial vulnerability that we didn’t realize existed. We were stable enough to not have to turn to credit to cover this expense, but pulling money from our savings was very scary considering that money is there to cover us in the event of job loss or a major life change. I was an unsettling feeling and I knew that we needed to find a solution to our problem. Luckily, we came up with a plan to create a sinking fund so that we would be prepared for something like this. It is something that will help us and I know it will help you too.

What is a Sinking Fund?

A sinking fund is an anticipatory fund that is used to save for a large future expense or the gradual repayment of a debt. More than that, it is a proactive approach to your money. Sinking funds are very similar to the cash envelope system because it requires you to divide your income into categories and assign every dollar a job. The main difference between the envelope system and a sinking fund is that your cash envelopes are for things you are spending on now like groceries, fuel for your car, and clothing. Your sinking fund, however, plans for future money goals. We thought about some of the expenses that caught us off guard in the past, like emergency surgery for both of our dogs last year (that was a couple thousand dollars), or bills that are due all at once like insurance premiums. Then we came up with 10 sinking funds that we believed served our household money goals. Check them out below.

Now it is time to create your sinking fund categories. Grab a pen and paper (yep, we are doing this old school), your significant other (if applicable) and a glass a Rose’ (because it makes the experience so much better) and let’s make a money plan. When you are creating your categories, remember that you don’t want to make too many funds because it will take longer to fully fund your categories. Plus, anything over 10 is too many to keep up with, in my opinion.

She Makes Cents Cares: I love hearing from readers, so once you have created your sinking fund categories, let me know via the She Makes Cents Facebook group, Instagram, or Twitter.

How Much Money Should Be In My Sinking Fund?

After you have created your sinking fund categories, now it is time to figure out how much money you need to have saved for each. First, you need to figure out the goal date and total amount needed for each of your sinking funds to be fully funded. For example, I have to pay around $450.00 every 6 months for my portion of the car insurance premium. To determine how much money I need in this particular sinking fund, I take my next due date and I divide my premium by that number of months. It usually breaks down like this for me:

$450.00 \ 6 months = $75.00 per month

I would much rather save $75.00 per month for six months than to have to come up with $450.00 once every six months. Yes, it’s the same amount of money but creating a monthly car insurance fund makes the amount of the premium easier to digest. The example above is an easy breakdown because we know exactly how much money is needed and when exactly we will need the money for this fund. Now let’s look at an example for a type of sinking fund where you don’t have a hard due date and you are not certain of the full price. Hello, Car Repair…it sounds like we are talking about you.

We have all experienced this. You are driving around minding your own business when a yellow warning light illuminates your dashboard. You take your car to the mechanic and you are hit with a $1,200.00 bill. What do you do? More than likely, you charge it to your credit card if you don’t already have some money set aside for this type of expense. CREDIT CARD = BAD IDEA. This is a moment when your Car Repair sinking fund will work for you. Even if your Car Repair Fund only has $800.00, that means you only have to come up with the remaining $400.00, which is easier to digest than $1,200.00. Yes, this may have been an unexpected expense but it is also one you were prepared to handle.

By creating sinking funds you take control of your money. You know where YOUR money is so you never have to ask yourself where it went. You give it a purpose. If you create sinking funds to cover your future needs, you are less likely to be a threat to your future financial self and that is something that everyone can benefit from.

Monday Motivation from Top Millennial Money Blogger, Danielle YB Vason, of She Makes Cents | Cultivate Good Habits

Monday Motivation | Cultivate Better Habits

Published on June 19, 2017July 2, 2020 by Danielle YB Vason1 Comment

Not too long ago I read this quote from the top financial expert, Dave Ramsey, and I knew it was too good not to share. “You can’t get out of debt while keeping the same lifestyle”. Often times we want results for our lives that’s different from our current situation. The thing is, you have got to change your habits if you desire a different outcome. If your goal is to upgrade your financial situation, you have to upgrade the effort you put into your goals to see the results. Increase your income + reduce your spending = the start to a great plan. Last Friday, I had a three-week profit from our BINGO Money Challenge of $383.00 that could have easily paid for a pair of shoes. Instead of living the lifestyle that is keeping me in a stagnant financial situation, I snowballed that $383.00 and threw it directly at my student loans. The gratification I get from a new pair of shoes is nothing compared to the natural high I get from getting closer to my debt free goal.

Today, I encourage you to use this week as a week of self-reflection. What habits do you want to cultivate? What habits do you want to quit? We know what each of our end goals are but we often are blind to the things we do to ourselves that sabotage those goals Start thinking about the things you do every day and how they affect your money goals. Yes, you can upgrade your financial situation, but you have to upgrade your actions first because your actions become habits… good or bad.

How Much is Student Loan Interest Really Costing You?

Published on June 14, 2017June 19, 2017 by Danielle YB Vason2 Comments

The rising student loan debt is one of the greatest financial problems plaguing millennials, especially millennial women. As of 2014, women account for 55 % of students enrolled in four-year colleges in the United States, according to the Federal Education Department and the figures continue to lean in favor of higher educated women. With the average student loan debt at a little over $30,000 and growing, how are we ever going to eliminate student loan debt at all? The answer lies first in understanding the numbers.

By definition, a loan is something that is borrowed that is expected to be paid back with interest. The operative word in that definition is “interest”. When you borrowed money from the government or your loan provider, you were given this money with the expectation that they will get their money back from you. In fact, they expect you to take your take, defer, and get off track because their business is in the interest and not the actual repayment of the original loan. Let me say that again for you. They make their money on the interest because you are expected to pay back what you originally borrowed. Student loan interest accrues daily once you are in your repayment period, which usually begins 6 months after your graduation date. So what does that mean exactly?

How Does Student Loan Interest Add Up?

I will use my student loan numbers to help you visualize why interest will keep you in debt if you don’t start to get aggressive. The exact math on this chilling realization is why millennials have a record amount of debt and a lower amount of home ownership. I have two loans that were consolidated for a collective original loan amount of $24,422.77 back in 2007. As of today, I have paid $21,189.89, which means that if this were an interest-free loan, I would only be $3232.88 away from having the loan paid off completely. However, because of interest, I still owe $16,738.90. How’s that you ask? Well, in the 10 years that have had this loan, interest has accrued daily. If you have studied your loan, you will notice that your daily accrual rate will change over the life of the loan. If you are paying down your debt, your daily rate will eventually reduce as a result of the reducing current balance. However, if you are one of those out of sight out of mind people who knows you have student loan debt that you have ignored, paying a reduced payment when you really can afford to pay more, or continually delaying your payment period, your daily rate is increasing…well, daily.

How To Beat Your Student Loan Debt

Currently, my student loan interest in accumulating at $3.09 per day/ $1127.85 per year, which is the lowest it has ever been. To beat the system, you must pay your debt down at a faster rate than it is growing. At $3.09 per day/ $92.70 per month, my snowball must be more than the monthly interest to make a difference. Now that you have seen my numbers, it is time to look at yours. To calculate your daily interest rate you must have the following numbers ready: your current balance and your interest rate.

In the past two months, I have watched my current balance drop at a faster rate than usual. That is because I have started making my regular monthly payment as well as an extra payment of money saved from the 52 Week BINGO money challenge. I was motivated to get a little more aggressive with paying down this loan when I set a micro goal for myself to have my loan under the $15,000 mark by the end of my birthday month (August). Coming up with a plan to beat your student loan debt first starts with the numbers. If you don’t already know your numbers, I urge you to look up your current balance and interest rate, calculate much your interest accrues daily, and as soon as you can, start making an extra payment above your monthly interest rate to get your debt moving in the right direction. Instead of focusing on just how much you have left to pay, pat yourself on the back for how far you have come on this debt journey. You can do it! You have to do it so you may as well do it as quickly as possible so you can put that money saved toward your next baby step toward financial freedom.

How To Improve Your Credit Score Today from blogger Danielle YB Vason of She Makes Cents | Money Hacks

5 Ways to Start Improving Your Credit Score TODAY

Published on April 26, 2017May 10, 2017 by Danielle YB Vason11 Comments

A great credit score can be the difference between being approved for that car you’ve saved for, that house you’ve looked at, and even that job that you just interviewed for that is now pulling your credit history. If you have a low score, the people who decide whether you are an “attractive” candidate hold the cards. If you, however, have a great credit score, you hold ALL the cards. I learned this when I was buying my first home just three days after my 24th birthday. In the midst of trying to prove to my parents that I was, in fact, a real and financially responsible adult by doubling up on student loan payments and keeping my credit card balance low, I was unknowingly improving my credit score. In fact, during the contract negotiation period of the home buying process, my score improved by 20 points. A great score also came in handy once I moved because the majority of my utility expenses did not need a deposit and I was offered a lower rate. No matter what your score is, it is never too late to start improving it.

Here are 5 Easy Ways to Boost your Credit Score

First and foremost, it is imperative that you know your score, that way you know where you stand. By law, all US citizens are entitled to one FREE credit history report, but depending on where you live your state may pay for one more. Georgia residents, for example, are entitled to two FREE credit reports from each reporting agency. This is a great time to make sure that all the information is correct and give you an overview of where your finances stand. Related Post: How to Dispute Errors on Your Credit Report
Pay your bills on time. It sounds simple, but I’m going to take a quick flashback to my college days when I was on the dance line of the marching band featured in Drumline. (insert flashback bubble here) To be early is to be ON TIME, to be “on time” is to be LATE, and to be late is UNACCEPTABLE (end flashback bubble…now). The same essentially holds true with how you pay your bills. The earlier you pay your bill, the better. For one, you are certain that your bill will be received by your service provider way before the date. More importantly, paying your bills as soon as you get them can be a quick but subtle increase to that credit score. I try to pay all bills within days of receiving my statements and then record the due dates and balance due in my calendar. This allows me a quick glimpse of my monthly financial trends. This is something I recommend to EVERYONE!
Use only one credit card. If you have more than one card, start paying down the card with the smallest balance first by doubling the minimum payment. Once, that card is paid down, move to the card with the second lowest balance. Double the minimum balance and tack on whatever you were applying to the first card, until that card is paid down, and then so on. This, lovely people, is what is called a money snowball. Next, choose one card to work with, preferably the one with the highest interest rate and take the other ones out of your wallet. Freeze them, cut them up, lock them away but whatever you do, do not close them. Closing a credit card can sink your credit score faster than you can say “She Makes Cents”. Don’t do it, don’t do it, do not do it…
Increase your credit limit. Now that you have worked towards reducing the debt on your existing card, credit card companies should begin to see you as an “attractive” customer. Call your company and request a credit increase. Again, this is not meant for you to start increasing your spending¸ but rather it is an opportunity for you to increase your credit to debt ratio. Can anyone say credit score boost? Related Post: How The Debt to Credit Ratio Affects Your Credit Score
Pay in Cash. I have said it before and I will say it again. Paying in cash forces you to really consider whether your purchase is right you. Personally, I find that paying for things in cash acts as a visual aid and helps keep me on track with my spending. In swiping a card, I can’t “see” my funds dwindling, but watching your cash go from thick to thin is definitely a sign that you could be mindlessly spending. When you pay in cash, you don’t have to worry about interest rates and hidden charges because Cash is ~~King~~ QUEEN.

How The Debt to Credit Ratio Affects Your Credit Score

Published on February 2, 2017June 30, 2020 by Danielle YB Vason2 Comments

debt-to-credit-ratio-credit-score-she-makes-cents Last year, one of my girlfriends and I decided that we were going to pay off our credit cards at the same time. I was paying down debt to start my snowball and get me one step closer to Dave Ramsey’s Baby Step Three. She was knocking down her revolving debt before she purchased her first home. In the process of us paying down our credit cards, we were both offered limit increases from our perspective credit card companies. I accepted the increase and she declined. Her rationale to decline was that she was trying to get rid of her monthly credit card payments because a limit increase would only entice her to spend. For me, accepting the almost $5,000.00 increase meant that I was lowering my debt to credit ratio.

What is A Debt to Credit Ratio?

A debt to credit ratio or a credit utilization ratio is just as it sounds….It’s the ratio of how much money you owe a particular debt as compared to the credit limit. If you have $4,000.00 balance on $10,000.00 credit limit, your debt represents 40% of your credit limit. The lower the ratio or percentage the better impact one’s credit score.

How The Debt to Credit Ratio Affects Your Credit Score

Outside of your payment history, your “amount owed” or debt to credit ratio, is the second highest factor in calculating an estimated 30% your credit score. Keep your balance under the 30% mark and you stay on the lower side of the debt to credit ratio, which is where most personal finance gurus would urge you to stay if you have to carry a balance.

At the same time that my credit card limit jumped up $5,000.00, my balance was quickly decreasing and I had a credit score of 786. The next month it moved up six points and stayed that way for three months. In July, the month I paid off my credit card, it jumped to 806 for about two months. I started using my credit card just a little bit carrying a small balance and it went back down to an 800 for about three months. I was on a high when I saw my score increasing so to see the decrease was disappointing…even if it was only a 6 point drop. I vowed then to do whatever I could to not let my credit card balance roll over to the next month ever again. I am happy to report that I currently have an 810 credit score. Moral of the story… lower your debt to credit ratio and it will have a positive impact on your credit score. You can do this by making on time payments to lower your debt balances and if you are offered a limit increase, take it only if you can continue to be responsible with your financial goals.

Dave Ramsey’s 7 Baby Steps Explained

Published on January 18, 2017February 23, 2017 by Danielle YB Vason9 Comments

Hey #SMCmoneytribe! Yesterday I took a little time out of my day to create an infographic for you that provides a quick overview into Dave Ramsey’s Baby Steps. I wanted to do this for you because I reference these steps in a lot of my writing because they have become the meat and potatoes of my financial plan. If you are a long time reader of She Makes Cents, you might remember when I was so excited to get to the second part of Baby Step 2 that I tried a risky financial move of playing financial Russian Roulette. Let’s just say the outcome was not what I expected when my car broke down one week later and I only had half of an emergency fund to help me out. (P.S. According to Ramsey, car maintenance is not an emergency and rather something that should be budgeted for).

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{Money & Relationships} 20 Hard Money Questions For Couples

Published on September 12, 2016September 12, 2016 by Danielle YB Vason1 Comment

{Financial Cents} BINGO Money Challenge Hits MAJOR Milestone

Published on June 18, 2016April 13, 2017 by Danielle YB Vason2 Comments

Hello Lovelies! I have some exciting news to share with you this morning. Yesterday I crossed off $14.00 – doesn’t sound too exciting yet, but wait for it….. – on the 52 Week BINGO Money Challenge. That $14.00 put me at the $1,000.00 mark for this money challenge! –INSERT HAPPY DANCE!!!!

On the same day that I hit the $1,000.00 mark in savings, I also hit the under $1,000.00 mark in my credit card balance!!! While I am proud of the financial gains made in the first six months of this challenge, I am even more excited about the about the savings habits I have created for myself. I believe that creating a healthy savings routine is the first step on my journey to DEBT FREE living. I was chatting with a girlfriend of mine who made the observation that I have only been focusing on saving and not making increasing my sources of income a priority. In a lot of ways she was correct. I have placed a serious focus this year on saving because in the past, I would start the year strong with savings goals and plans for myself only to find some of them abandoned by mid-year. That being said, splitting my focus between increasing streams of income and saving would have only created more problems at that point in my journey when I wasn’t steadfast in making saving a priority. The phrase, “More Money, More Problems”, exists for a reason. Without a healthy savings routine and more income coming in, I could have easily created more debt and worsen bad spending habits. I have spent the first six months of this year really focusing on correcting past bad behaviors and replacing them with healthy habits. Now that I have solid saving habits, I can start also focusing on increasing income and using that increase to move on the next snowball in my overall financial plan- student loans debt. I attribute my success to personal will, saying no to social (sometimes), and having accountability partners, like readers of She Makes Cents to help keep me motivated. I would love to hear how you are doing with this challenge… the good, the bad, and the ugly.

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{Financial Cents} A Quick Tip to Help You Pay Down Debt

Published on February 24, 2016December 22, 2016 by Danielle YB Vason3 Comments

Happy Hump Day Lovelies! I wanted to give you a quick tip that I am using to help me pay down my credit card debt. If you can, I would recommend you plan your payments on debt such as your mortgage and credit cards to bi-weekly payments. Since there are two months out of the year that have five weeks, you end up with an extra month’s payment at the end of the year. Those payments can be applied directly to the principal, which I recommend, or give you the opportunity to have these loans paid one month in advanced.

PROS

It helps you pay off debt faster
Reduces the amount of interest you have to pay back over the life of the loan

CONS

All lenders and credit card companies do not allow you to split your payments. If this is the case, you can create a money envelope for that extra payment you will have at the end of the year and use it to pay on top of your monthly minimum. It’s not a true “con” on the pros and cons list, but it does require an extra step and discipline to not spend that money

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