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July 26, 2010

  • News:  FICO 8 Up And Running

    A new credit scoring system that was rolled out by FICO in 2009 has gained popularity over the past year. The FICO 8 Score has been adopted by more than 2,700 lenders over the past year which is said to be 15 percent more reliable in predicting at risk credit cardholders. According to Robert Duque-Ribeiro, Vice President and General Manager of FICO Scores said the transition to the new model takes time to test and validate with each added credit card company. Although Duque-Ribeiro did not give an exact count of the number of credit card companies that were already using the new FICO 8 Scoring system, he did indicate that one of the largest lenders was completely running with it.

    So what makes FICO 8 different and better that the old FICO score? Credit cardholders will appreciate the systems leniency toward late payments. Borrowers are not penalized on the first time late payment; however, if the consumer is a habitual late payer, the penalty will be much stiffer. FICO 8 is also more forgiving when it comes to small collection debts and judgments of less than $100. Beware of maxing out your credit cards; FICO 8 will take away more points than the previous model. Cardholders accustomed to using someone else's good credit to piggyback as an authorized user on an account will not reap the same benefits as they once did.

    There are many similarities between the old FICO model and FICO 8; both have the same credit score range of between 300 and 850. Both are equally sensitive credit inquiries, minimum scoring criteria's and score reason codes. Credit card balances also play an important role in both models. Many of the credit score promotions currently are selling the old FICO scores; however, Duque-Ribeiro says it will not be long before most companies convert to the new FICO 8 Score. FICO expects to make the new score available for purchase to the general public within a few months.

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