clearn.png
Thursday February 27th, 2020 8:48PM

Liz Weston: Is better credit worth exposing your bank data?

By The Associated Press

America's credit bureaus haven't exactly covered themselves in glory when it comes to protecting your private data. So you might well be skeptical about two new credit-enhancing products that require not just credit information but also 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. For Boost, people have to sign up for a membership, while UltraFICO would be offered by lenders to applicants who might otherwise be turned down or get higher rates.

SHOULD YOU TRUST A CREDIT BUREAU WITH YOUR BANK ACCOUNT?

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" means the bank account information, including login credentials and passwords, that must remain in a database for at least seven years for regulatory reasons.

Now, Experian is not the credit bureau that exposed 145 million people's data in a massive breach two years ago. That was Equifax. But in 2015, Experian reported a breach of the same types of information — names, addresses, dates of birth, Social Security numbers, 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. Information about you and your credit accounts is reported to the bureaus whether you like it or not. With bank accounts, you typically still have the option of choosing who gets access — and you should choose carefully.

EXPERIAN BOOST AND ULTRAFICO AREN'T FOR EVERYONE

Boost and UltraFICO offer the tantalizing prospect of instant gratification — 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. The product is aimed at people with bad-to-fair FICO scores of 580 to 669. (The average U.S. score is just over 700, or solidly in the "good" zone on FICO's 300-to-850 scale.) Even then, Experian says only 5% to 15% 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.

THERE ARE OTHER, BETTER WAYS TO BUILD CREDIT

The other big drawback: Both Boost and UltraFICO work only with Experian data and certain scores. (Boost works with FICO 8, FICO 9, VantageScore 3.0 and VantageScore 4 .0; UltraFICO works only with FICO scores.) If your lenders use other scores or other credit bureaus — and many do — you're out of luck.

By contrast, 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.

The goal of giving more people access to affordable credit is certainly a worthy one. But 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.

___________________________________________________

This column was provided to The Associated Press by the personal finance website NerdWallet.

Liz Weston is a columnist at NerdWallet, a certified financial planner and author of "Your Credit Score." Email: lweston@nerdwallet.com. Twitter: @lizweston.

RELATED LINK:

NerdWallet: Experian 'Boost' adds a new way to strengthen your credit http://bit.ly/nerdwallet-explains-experian-boost

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Personal Finance
© Copyright 2020 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Harry, Meghan 'over the moon' about their healthy baby boy
Meghan, the Duchess of Sussex, has given birth to a healthy baby boy, a beaming Prince Harry announced to the world, declaring he's "incredibly proud" of his wife
11:01AM ( 20 minutes ago )
US to make 30,000 more visas available for seasonal workers
The Trump Administration is making 30,000 more temporary visas available for seasonal work through the end of September
11:00AM ( 21 minutes ago )
Erdogan: Turkey not seeking alternatives to ties with West
Turkish President Recep Tayyip Erdogan says Turkey's decision to purchase Russian-made S-400 missile defense systems does not mean that it is seeking "alternatives" in its relations with the West
10:45AM ( 36 minutes ago )
Associated Press (AP)
A grim preview of a trade war takes shape
Companies that rely on China are getting hammered after Trump vows tariff escalation
10:16AM ( 1 hour ago )
Surprise threat from Trump to raise tariffs sinks stocks
Stocks fell sharply after President Donald Trump issued a surprise threat to raise tariffs on Chinese goods just as talks to end the longstanding trade conflict appeared to be winding down.
10:09AM ( 1 hour ago )
Google's AI Assistant aims to transcend the smart speaker
Google's digital voice assistant still trails Amazon in the smart speaker race
9:47AM ( 1 hour ago )
AP Business
2 arrested after clash in Sri Lanka town hit by Easter blast
Two people have been arrested and an overnight curfew lifted after mobs attacked Muslim-owned shops and some vehicles in a Sri Lankan town where a suicide bombing targeted a Catholic church last month
3:05AM ( 8 hours ago )
GOP thwarts governor's push to expand Medicaid in Kansas
Democratic Gov. Laura Kelly's effort to expand Medicaid in Kansas this year has died
12:21AM ( 1 day ago )
The Latest: Biden suggests offering Medicare-like option
Joe Biden is arguing to allow any adult American to buy "Medicare-like" insurance as part of expanding health-care access in the U.S.
5:40PM ( 1 day ago )
AP Business - Personal Finance
Harry, Meghan 'over the moon' about their healthy baby boy
Meghan, the Duchess of Sussex, has given birth to a healthy baby boy, a beaming Prince Harry announced to the world, declaring he's "incredibly proud" of his wife
11:01AM ( 20 minutes ago )
US to make 30,000 more visas available for seasonal workers
The Trump Administration is making 30,000 more temporary visas available for seasonal work through the end of September
11:00AM ( 21 minutes ago )
Erdogan: Turkey not seeking alternatives to ties with West
Turkish President Recep Tayyip Erdogan says Turkey's decision to purchase Russian-made S-400 missile defense systems does not mean that it is seeking "alternatives" in its relations with the West
10:45AM ( 36 minutes ago )
North Korea tests new missile - and Trump's resolve
North Korea's test of what appears to be short-range ballistic missile wasn't a direct threat to the United States, but experts warn it could be an omen of bigger problems on the horizon
10:44AM ( 37 minutes ago )
Maximum Security out of Preakness; Derby DQ to be appealed
Maximum Security will not run Preakness; owner will appeal disqualification as Derby winner
10:41AM ( 40 minutes ago )