topic Re: FICO 8 - More consumer friendly? in General Credit Topics

FICO 8 - More consumer friendly?

CS800 — Thu, 27 Oct 2011 18:28:51 GMT

From another article, I quote:

3 victories for consumers

Not all the news is bad. FICO 08 offers some definite improvements for consumers in several areas, including:

Collections. The new formula ignores small collection accounts in which the original debt was less than $100. This is a big victory for consumers and one I've advocated for years, because niggling little debts -- created by unpaid library fines, forgotten parking tickets or a small medical bill that slipped through the insurance cracks -- had an outsize impact on people's scores. -- That's great news !

Credit missteps. Fair Isaac says the new version is less punishing to those who have had a serious credit setback, such as a charge-off or a repossession, as long as their other active credit accounts are all in good standing. -- Another great change !!

Authorized users. Fair Isaac initially said FICO 08 would combat potential fraud by ignoring any "authorized-user" accounts in a borrower's credit report. After a big consumer outcry and potential credit fairness issues, Fair Isaac backed off and decided some authorized-user information would be included. --AU's have long enjoyed that benefit while in rebuilding mode or for AAoA purposes. This one might not be very well received by many. Although it still counts towards the FICO scoring, it's power has somehow diminished.

Re: FICO 8 - More consumer friendly?

Anonymous — Thu, 27 Oct 2011 19:35:16 GMT

Is FICO 8 going to become the most commonly used scoring system among creditors/lenders?

(Edited to make sense!)

Re: FICO 8 - More consumer friendly?

CS800 — Thu, 27 Oct 2011 18:30:57 GMT

@Anonymous wrote:
If FICO 8 going to become the most commonly used scoring system among creditors/lenders?

Eventually lenders will move towards the FICO 8. Currently most lenders are still relying on the FICO Classic.

Re: FICO 8 - More consumer friendly?

fused — Thu, 27 Oct 2011 18:31:25 GMT

@Anonymous wrote:
If FICO 8 going to become the most commonly used scoring system among creditors/lenders?

Maybe, but not any time soon.

Re: FICO 8 - More consumer friendly?

ADARPegasus — Wed, 09 Nov 2011 03:18:05 GMT

From what i was told by the My Fico.com rep Fico 8 does include authorized users..

Re: FICO 8 - More consumer friendly?

CS800 — Wed, 09 Nov 2011 14:32:51 GMT

@Jonbuck06 wrote:
From what i was told by the My Fico.com rep Fico 8 does include authorized users..

But it will not have as much power as it used to have. What does this mean? I don't know

Here's a good read:

http://www.la.bbb.org/GIReport.aspx?NewsID=177

Re: FICO 8 - More consumer friendly?

pizzadude — Wed, 09 Nov 2011 15:05:37 GMT

Thanks for posting the link to the article ! The main point on piggybacking that I read is FICO 08 restricts piggybacking to only the card holder's family.

So it sounds like AU accounts which don't belong to a relative are not going to be factored into your score.

Re: FICO 8 - More consumer friendly?

llecs — Wed, 09 Nov 2011 15:54:48 GMT

@pizzadude wrote:

Thanks for posting the link to the article ! The main point on piggybacking that I read is FICO 08 restricts piggybacking to only the card holder's family.

So it sounds like AU accounts which don't belong to a relative are not going to be factored into your score.

FICO was aiming for that, but completely backed away. AUs factor into any FICO08 versions just equally as if you were the account owner, regardless of affiliation to that owner. IIRC, they were worried about the Equal Credit Opportunity Act and they interpreted the law as it was illegal to restrict AU access. VantageScore and other FAKOs block AUs from scoring though.

Re: FICO 8 - More consumer friendly?

Ms-Kato — Wed, 09 Nov 2011 16:39:16 GMT

Will myFICO be upgrading to FICO 8 in the future or are they currently using the newer version ?

Re: FICO 8 - More consumer friendly?

llecs — Wed, 09 Nov 2011 17:38:26 GMT

MyFICO is using TU98 for your TU FICO (created in 1998) and is using Beacon 5.0 for your EQ FICO (created in 2005). For EQ, most lenders are still using the same version on here, though they can switch to the FICO8 version if they wanted to (aka Beacon 9.0). For TU, most lenders use a version from 2004 called TU04, and aren't opting to switch to the FICO8 version. These statements apply generally to mortgage lending. Of course, there could be a seperate FICO version used in CC approvals, car approvals, etc.

ETA....as someone who recently went through the mortgage process, my hope for others would be that they keep EQ Beacon 5.0 at least. It would be cool if they upgrades TU98 to TU04. I hope they don't switch both to the FICO8 version because nobody's score would match the one in here.

Re: FICO 8 - More consumer friendly?

ADARPegasus — Wed, 09 Nov 2011 19:49:57 GMT

yep thats what i was told that authorized users are counted exactly the same its up to the bank that reports the cards to report Authorized Users but FICO using everything on the credit so authorized user account is that same as a individual or joint account.

@llecs wrote:
@pizzadude wrote:

Thanks for posting the link to the article ! The main point on piggybacking that I read is FICO 08 restricts piggybacking to only the card holder's family.

So it sounds like AU accounts which don't belong to a relative are not going to be factored into your score.

FICO was aiming for that, but completely backed away. AUs factor into any FICO08 versions just equally as if you were the account owner, regardless of affiliation to that owner. IIRC, they were worried about the Equal Credit Opportunity Act and they interpreted the law as it was illegal to restrict AU access. VantageScore and other FAKOs block AUs from scoring though.

Re: FICO 8 - More consumer friendly?

boomhower — Fri, 11 Nov 2011 13:38:16 GMT

I don't get why they just don't set a transition date and eveyone moves to the new formula. It's rediculous that there are three different TU FiCOS in use. If a company wants to use there own scoring formula that's fine, but if it's a FICO score then it should be all the same.(well one of three, one for each CRA). It would make it simpler on everyone involved.

Re: FICO 8 - More consumer friendly?

Anonymous — Fri, 11 Nov 2011 15:16:25 GMT

What about medical collections of $100?

I have a number of those because of a large hospital visit during 2009. They're all listed as spearate accounts with the same collection agency too. My insurance and the hospital were going back and forth and when all was finally paid, they said I was responsible for a $100 co-pay

So I wonder if it's $99 and under, or $100 and under.

The joy of this whole credit report and scoring process is that the powers that be have made it as clear as mud for the little guy to understand.

Re: FICO 8 - More consumer friendly?

CS800 — Fri, 11 Nov 2011 15:46:41 GMT

@Anonymous wrote:
What about medical collections of $100?

I have a number of those because of a large hospital visit during 2009. They're all listed as spearate accounts with the same collection agency too. My insurance and the hospital were going back and forth and when all was finally paid, they said I was responsible for a $100 co-pay

So I wonder if it's $99 and under, or $100 and under.

The joy of this whole credit report and scoring process is that the powers that be have made it as clear as mud for the little guy to understand.

What I give to you is an example that I had with Discover since they use Beacon 9.0 (FICO 08).

My EQ with them was about 35 points higher than myfico. The only conclusion I came to was that my PIF collection for $80 didn't weigh that much under FICO08.

Re: FICO 8 - More consumer friendly?

CS800 — Fri, 11 Nov 2011 15:49:28 GMT

@boomhower wrote:
I don't get why they just don't set a transition date and eveyone moves to the new formula. It's rediculous that there are three different TU FiCOS in use. If a company wants to use there own scoring formula that's fine, but if it's a FICO score then it should be all the same.(well one of three, one for each CRA). It would make it simpler on everyone involved.

It's a money game; that why you see Plus Score/Vantage. They all want to get a piece of the pie from the credit game. It would be too easy to have one system. Even EX has stopped seeling their socre to the common mortals. If you go on their website you get a plusscore (useless).

YOu make total sense and this has been echoed by most of us on here but until there are established regulations to protect the consumers, this won't change.

Re: FICO 8 - More consumer friendly?

llecs — Fri, 11 Nov 2011 16:45:57 GMT

@boomhower wrote:
I don't get why they just don't set a transition date and eveyone moves to the new formula. It's rediculous that there are three different TU FiCOS in use. If a company wants to use there own scoring formula that's fine, but if it's a FICO score then it should be all the same.(well one of three, one for each CRA). It would make it simpler on everyone involved.

Look at FICO scores like cars. Some of us like the classics and some of us prefer something modern. Like with cars, FICO is the same way. There are some lenders who find that the older score works better for them with regards to risk than the newer ones. And some prefer the newer to the older. They'll take a sampling of data of past loans and run it through the new model to see if that score version would have better predicted the risk than the one they have currently. Since the demographic varies from region to region as do their economies, there is never a one-size-fits-all scenario and that's why you'll see different versions used.

Re: FICO 8 - More consumer friendly?

GregB — Fri, 11 Nov 2011 16:56:17 GMT

A business is lending the money. They get to choose if the borrower is qualified based upon their criteria. They used to do this through a complex system of references, credit history, and having to manually check with other lenders. The FICO system started as a simpler way to determine basic credit qualification. It may be the only criteria for very simple loans such as a low limit store card. It is only the first hurdle in a long process for more complex loans such as a home.

It is extremely rare that any individual has a good grasp on how the lender actually sees them as a credit risk. A borrower that thinks they know how the system should work makes about as much sense as having an election by asking each candidate if they think they are the one that should have the position.

Re: FICO 8 - More consumer friendly?

GregB — Sun, 13 Nov 2011 17:38:17 GMT

@CS800 wrote:
@Anonymous wrote:
What about medical collections of $100?

I have a number of those because of a large hospital visit during 2009. They're all listed as spearate accounts with the same collection agency too. My insurance and the hospital were going back and forth and when all was finally paid, they said I was responsible for a $100 co-pay

So I wonder if it's $99 and under, or $100 and under.

The joy of this whole credit report and scoring process is that the powers that be have made it as clear as mud for the little guy to understand.
What I give to you is an example that I had with Discover since they use Beacon 9.0 (FICO 08).

My EQ with them was about 35 points higher than myfico. The only conclusion I came to was that my PIF collection for $80 didn't weigh that much under FICO08.

For both of you:

The specific language is "Small amount collection and public record items (under $100) are no longer evaluated."

My customer has upgraded to Beacon 09 but I haven't seen enough credit apps to have a better opinion if results match their marketing.