06-10-2009 10:39 AM - edited 06-10-2009 10:43 AM
No more buying tradelines hopefully:
New patent-pending technology also protects the BEACON 09 score from the potential abuse of authorized user credit accounts, by reducing any potential impact to the score from tampering. Since its introduction in 1989, the BEACON score has helped lenders comply with an important federal regulation by automatically including authorized user accounts in the score’s assessment of risk. Under the Equal Credit Opportunity Act (ECOA), when lenders assess a spouse’s credit risk they are required by law to consider the credit history of accounts which both spouses are permitted to use. By incorporating innovative technology into the BEACON 09 formula, the new score continues to help lenders meet this legal requirement. This information is not intended to be legal advice; lenders are encouraged to check with their own legal counsel to determine how best to meet regulatory compliance requirements.
06-10-2009 06:59 PM
I would also like to know when/if this version is being provided here on myFico.
Have they been using the 08 formula here already, or was it just officially released?
06-10-2009 07:45 PM - edited 06-10-2009 07:49 PM
It's unlikely that any lender is currently using either Fico'08 or Beacon 09. And don't hold your breath.
MyFico is offering the Beacon 5.0 Equifax score and the 1998 classic TransUnion score. I don't expect a different EQ score to be offered for quite awhile. And if/when the TU score is "updated", it will be to the 2004 version, which is the most common model used by mortgage lenders at this time.
Lenders and resellers do not adopt new scoring models overnight, just as businesses do not immediately convert every time a new version of MS Office is released (and Microsoft has a lot more leverage than Fico does).
Keep in mind there are some mortgage lenders and resellers who are still using the 1998 TU classic scoring model ...
06-10-2009 09:32 PM
06-11-2009 03:53 AM
06-11-2009 05:10 AM
No new scoring model will be seen here until half the nation's lenders are using it. Even FICO 08 has barely penetrated the credit market.
So don't hold your breath.
Scores from myFICO are still Beacon 5.0, which is what lenders are currently using, and TU98 (they're working on switching to TU04, now that '04 has hit the 50% usage mark.)
Lenders are slow to change, because they want to validate the new scoring model first in order to learn how accurate it really is and also maybe to decide whether to adjust their cutoffs (Fair Isaac claims with better predictive power lenders can either get lower bad rates with the same rejection rates or lower rejection rates with the same bad rates, and I am sure lenders would want to test such claims). I expect a lender will start off by pulling both new and old scores on a small fraction of their customers then see what happens on those accounts over the next N months so they can compare predictive power of new versus old models. They might select randomly from all their accounts, or they might select primarily accounts near key borderlines for testing, or whatever selection algorithm their analysts think will enable them to best evaluate Fair Isaac's claims. I have zero experience in the finance industry, but in my work of pharmaceutical R&D when purchasing database mining tools we never take vendor claims on faith either, we'll run a pilot test on our own data to evaluate how well the algorithms work so I'm sure that's how lenders work. That's how any large company in a risk-averse and heavily regulated industry has to work.