The Student Federal Credit Union at the University of Pennsylvania is rolling out a credit builder this week, the first of its kind specifically aiming to increase UltraFICO credit scores, student leaders said.
The SFCU at Penn's new credit builder loan is designed to help raise a consumer's UltraFICO score, which launched in January. The score will supplement the traditional FICO score, which is used by lenders to determine a customer’s creditworthiness. UltraFICO scores typically benefit consumers with little credit history or low credit scores.
“UltraFICO is meant to help exactly the types of people that are like Penn students,” SFCU Chief Lending Officer and College and Wharton senior Adrian Lapsenson said, since students typically do not have an extensive credit history.
The SFCU credit builder allows the credit union’s members to take out a low-interest loan with their account savings acting as the collateral if the borrower defaults on their loan, the group's leaders said. This creates a credit history for members, making it easier to obtain loans in the future.
The new credit builder loan differs in the way it raises a consumer's UltraFICO score, which assesses financial behavior based on how people manage their checking, savings or money market accounts.
“There’s a couple of changes we’ve been able to implement to the way the loan is structured where the loan will interact with your checking account and generate checking account activity, reflecting in a better UltraFICO score,” Lapsenson said.
This will help people like college students whose ordinary FICO score may be low because of a lack of information for FICO to draw on, he said.
SFCU’s new offering would be “very helpful for people like international students who don’t have an extensive credit history" in the United States, SFCU CEO and Wharton and Engineering senior Wesley Sheker said.
The credit builder took a year to create, said Sheker, who is a former reporter for The Daily Pennsylvanian. The first step in this process was ensuring that the new product complies with government regulations since the SFCU is a federally chartered credit union and is regulated by the National Credit Union Administration, he added.
Currently, SFCU at Penn relies heavily on word-of-mouth to market new products with existing customers and SFCU employees talking to other students, College freshman and SFCU bank teller Emily Becker said.
“A lot of the marketing is just me telling my friends about the credit union," Becker said.
SFCU at Penn plans to work with relevant student groups on a case-by-case basis to increase awareness of their services, Sheker said. He added that they have previously collaborated with Penn Money Matters, a group that seeks to improve financial literacy, and said they hope to reach out to international student groups.
“Something that we’re continuing to work on is getting in contact with the students that these products can actually benefit,” Sheker said.