FICO 08 revisited - your FICO score may increase in 2008
Recently, an 'improved' version of FICO was introduced, the FICO 08. The new FICO 08 is already being implemented by Experian, and TransUnion expects to have the 08 scoring model available for lenders to test during the second quarter of 2008. Equifax is not implementing it yet. The Wall Street Journal has the inside - you can read the complete article here.
We'd like to outline the main changes in credit scoring ... that consumers could start seeing by the spring of 2008.
For some of us there are good news ... and it is that new FICO "aims to forgive small slips but punish repeat offenders.", and that "overall, more consumers will see their FICO scores go up slightly than will see their scores drop.", as per the maker of FICO 08 score, Fair Issac Company.
1. FICO 08 will be more forgiving of occasional slips by consumers, but the repeat offenders will be penalized more.
2. Subprime consumers with thin credit history or young people will now score better.
3. Those who are actively seeking new credit won't be penalized as much.
4. Consumers who maintain a variety of credit types (such as credit cards, a mortgage and auto loan) will now be getting higher scores.
5. But those who use a high percentage of their available credit will be now penalized to a greater degree.
6. Subprime consumers with serious delinquency (such as 90-day past payment) will get a better score if they have several other credit accounts in good standing.
7. But a person's score could drop if he or she has multiple delinquent accounts.
8. FICO 08 will no longer consider the 'authorized user' credit-card accounts which means that giving a credit card to a child or a spouse as an authorized user will not help boosting their credit score.
Based on changes outlined above, people who currently have the same FICO score could see their scores diverge under the new scoring model. Fair Isaak Company offers this fictional example on how it may look like later this year:
New score range will still be 300 to 850.
Tue Jan 29, 2008 02:01PM by Tony | More in Credit Repair | Comments (0)
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