02-01-2011 12:54 PM
I am confused about FICO 2008. Was this suppose to replace the FICO version already used or was this a new scoring model?
Also, I have read that there were some changes made on the FICO scoring model such as how charge cards (Amex) are being reported and how paid charge offs or collections are being reported so the date of last activity will not impact the score. Has this been impleted in FICO 2008 or the "regular" FICO?
Thanks for you answers!
02-01-2011 06:52 PM
Yes FICO 2008 is the latest version of the FICO score. At some point it will replace the current verions of the score. Amex accounts that the terms of the account are the balance is due in full every month are excluded from the FICO credit utilzation calculation. Other Amex cards according to other posts are also excluded. Having a crad excluded can help or it can hurt. If the small balance every month with a good credit limit if this account were included it would your credit utilization calculation. If you had high balance lets say 50% or more of credit limt here it helps. This is not new to FICO 08. A collection accounts under $100 you will not hurt your score. If you have multiple collection accounts the score model will penalize you more for this than before. Also how it treats AU accounts will also change. The impact is it will not be as much as in past FICO socre models but it will give you some credit for the account. The change in AU accounts is due to scam called "credit rental" you can search for it. I hope this helps.
02-01-2011 07:47 PM
To add....there are different versions of FICO scores out there and there are different versions created for each CRA. For example, for TU, there's TU98, TU04, and TU08. Specifically, they are called FICO Risk Score...Classic 98, Classic 04, and Classic 08 I believe. Then there's Experian and the versions are called Fair Isaac Risk Model v2, v3? and so on. Then there's Beacon 5.0, Beacon 9.0 (FICO 08) for EQ and so on. And to complicate things, there are non-Classic FICO scores like industry enhanced scores (e.g. mortgage-enhanced, auto-enhanced, etc.) that score more heavily on one industry like cars or mortgages. Finally, there are other non-Classic scores like NextGen scores (e.g. Alliant CU uses it or USAA uses it for one of the 3 CRAs in their mortgage lending). Even though FICO 08 is available for any lender to use, virtually none of them are using them. In fact, most lenders are using a 2005 EQ version (Beacon 5.0...just like on myFICO). Most recently started using TU04 for TU (myFICO still uses TU98...as do some lenders still). And many lenders are still using an EX FICO version that is approaching 10 years old. Most tend to stick with what works I guess and are slow to adopt the new flavors (er, um versions).
02-02-2011 11:55 AM
Thanks for the information! Much appreciated!
I understand scoring models geared towards mortgages and auto loans, but I can't understand why the credit scoring system has other types of models. Its to bad it can not be more uniformed for consistency. If some models put charge cards (like Amex charge and Diners) in a separate category and some put in the utilization rate. There can be a big difference in ones score.
Also, how are paid collections/charge offs handled. I read that paying these type of accounts can initially hurt your score.