Is Better Credit Worth Exposing Your Bank Data?

America’s credit bureaus haven’t exactly covered themselves with glory when it comes to protecting your private data. So you might be skeptical of two new credit enhancement products that require not only credit information but also access to your bank accounts.

Experian and the credit rating company FICO presented UltraFICO last year as a way to raise credit scores based on how people manage their checking, savings or money market accounts. UltraFICO is currently in the pilot phase and should be more widely available this summer.

The credit bureau also launched Experience boost, which allows people to add on-time cell phone and utility payments to their Experian credit reports. Positive bill payment history can add points to some credit scores, but users need to link their bank accounts so that Boost can track 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 can also help people with damaged credit. For Boost, people have to sign up to become a member, while UltraFICO would be offered by lenders to applicants who might otherwise be turned down or get higher rates.

Should you take your bank account to a credit bureau?

Both products get bank account information from the Finicity data aggregator, which promises ‘bank-grade security’, including ‘best-in-class’ third-party security certifications and regular audits by internal teams and external.

“All data is encrypted throughout the entire process, from data entry to data transmission to data at rest,” says Steve Smith, CEO of Finicity.

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

Today, Experian isn’t the credit bureau that exposed the data of 145 million people in a massive breach two years ago. It was Equifax. But in 2015, Experian reported a violation 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, the Experian site unveiled the personal identification numbers needed to unfreeze credits.

You have no choice but to be in a credit bureau database. Information about you and your credit accounts is reported to bureaus whether you like it or not. With bank accounts, you usually always have the flexibility to choose who has access to them – and you have to choose carefully.

Experian Boost and UltraFICO are not for everyone

Boost and UltraFICO offer the tantalizing prospect of instant gratification – more credit points, instantly! – but it remains to be seen how many people will actually benefit.

You will probably want to pass Boost if your credit is good. Your scores may go up by just a few points, if any. The product is aimed at people with poor to fair FICO scores of 580 to 669. (The US average score is just over 700, or solidly in the “good” area on the 300 to 850 scale. Even so, Experian says that only 5% to 15% of Boost users who saw an increase had a big enough jump to move them up an entire category (from bad credit to fair, or fair to good).

UltraFICO, meanwhile, targets people with scores ranging from the high 500 to the low 600. Those most likely to benefit keep a cushion of at least $ 400 in their bank accounts and never let their balances go down. below zero. If your bank account is constantly down or dips into the red, you are unlikely to see any improvement in your scores.

There are other better ways to build credit

The other big downside: Boost and UltraFICO only work with Experian data and certain scores. (Boost works with FICO 8, FICO 9, VantageScore 3.0, and VantageScore 4.0; UltraFICO only works with FICO scores.) If your lenders use other scores or other credit bureaus – and many do – you don’t. no chance.

  • Being added as an authorized user to someone else’s credit card.

  • Use a homebuilder loan, offered by many credit unions and at least one online lender.

  • Use a secured credit card, where the credit limit is usually equal to a deposit made with the issuing bank.

The goal of giving more people access to affordable credit is certainly laudable. But before you send any more data to a credit bureau, you need to be sure that you don’t have better options and that the payoff is worth the risk.

This article was written by NerdWallet and was originally published by The Associated Press.

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