I have now heard it all. Your banking skills might just be the deciding factor that gets you that loan you want. Starting in 2019, Fair Isaac's credit score will be introducing a new credit score called the UltraFICO credit score. It takes the current credit scoring system of FICO and adds a layer of additional credit qualification - your bank management skills.
With this credit scoring system how you manage your bank accounts will help determine whether or not your score goes up enough to qualify for a loan. So as long as you managed cash well and didn't overdraft, your credit score could get a boost.
Here are a few "takeaways":
If you couldn't qualify for a loan with the current system you probably don't need to be adding debt As it stands now, the current FICO system qualifies consumers for credit that really have no business borrowing more.
Fair Isaac, the creator of the FICO score, has just introduced a new way to charge lenders a fee for a new credit score. Creditors have to opt into the new system.
I hope that credit score boost is not to generous. Managing your bank account is not necessarily a tough skill set and provides very little data that says you should qualify for credit.
Banks have just been given a resource/justification to loan out money at high interest rates and further take advantage of consumers. I would bet that if you can't qualify under normal FICO standards, that you are considered risky with the UltraFICO thus requiring a higher interest rate.
Finally, this is dangerous for the consumer. Just because the bank says you can borrow the money doesn't mean you should.
Prior to the financial crisis we had a debt bubble and it burst. This sure seems like debt bubble 2.0. The UltraFICO scoring system is a bad sign of the times.