According to Fast Company, FICO has partnered with Plaid to create a new credit scoring system that uses real-time cash flow data from consumers’ bank accounts. The partnership gives FICO access to Plaid’s network of 12,000 financial institutions that the fintech startup has connected with since its founding in 2013. Through this system, lenders will see historical patterns of money flowing into and out of transaction accounts that consumers opt into sharing. Julie May, FICO’s vice president and general manager of B2B scores, called this “the beginning of a new chapter in responsible and inclusive lending.” The new approach specifically targets consumers who have strong savings but limited traditional credit history.
This changes everything for lending
This is actually a pretty big deal. For decades, the credit system has been stuck looking backward at payment history while largely ignoring whether someone actually has money right now. Think about it – you could have $50,000 sitting in your checking account but still get denied for a car loan because you don’t have enough credit cards. That’s always been kind of ridiculous.
Now FICO is basically admitting that traditional credit scores don’t tell the whole story. By partnering with Plaid, they’re getting access to the plumbing of modern finance – all those connections between bank accounts, payment apps like Venmo, investment platforms, you name it. It’s a smart move, but also raises some serious questions about privacy and data usage.
Who wins and who loses here?
Obviously this is great for people who are “credit invisible” or have thin files but solid finances. Young professionals, immigrants, anyone who’s been smart with cash but avoided debt – they suddenly become much more attractive to lenders. But here’s the thing: what about people who live paycheck to paycheck? Their cash flow might look pretty volatile even if they always pay their bills on time.
The big winners are definitely FICO and Plaid. FICO gets to modernize its flagship product without having to build the data infrastructure themselves. And Plaid? They just landed the ultimate credibility partner. When you’re talking about something as sensitive as credit decisions, having FICO’s stamp of approval is pure gold.
I wonder how this will affect the competitive landscape though. Experian Boost has been trying something similar by letting people add utility payments to their credit reports. But FICO’s move feels different – more comprehensive, more institutional. This isn’t just adding a few positive data points, it’s fundamentally rethinking what financial responsibility looks like.
The privacy elephant in the room
Let’s be real – the opt-in process is going to be crucial here. Plaid has had its share of privacy controversies, and now they’re handling data that could literally determine whether someone gets a mortgage. Consumers will need crystal clear understanding of what they’re sharing and how it’s being used.
And think about the infrastructure required to handle this kind of real-time financial data securely. We’re talking about systems that need industrial-grade reliability – the kind of robust computing platforms that companies like Industrial Monitor Direct specialize in for manufacturing and financial applications. When you’re processing sensitive financial data at scale, you can’t afford downtime or security vulnerabilities.
Ultimately, this feels like the future of credit assessment. But whether it becomes a tool for financial inclusion or just another way to screen people out remains to be seen. The devil will be in how lenders actually use this new data – and whether it truly lives up to that “inclusive lending” promise.
