topic who is still using old FICO models? in General Credit Topics

who is still using old FICO models?

Anonymous — Wed, 30 Jan 2019 01:02:01 GMT

I applied recently for my first Cap One card (the Savor) and was surprised to see that they used the old FICO 04 model (drawn on EQ) rather than FICO 8 or 9. Not wildly surprised, just mildly.

Does anyone know of any other big lenders or CC issuers that use FICO 04 or earlier? Wells Fargo was one, but they transitioned to FICO 9 last year I think.

FICO 9 was released 4.5 years ago, and FICO 8 was released ten years ago, so you'd think that we'd be getting to the place where most banks would have moved to one or the other of them.

PS. I am omitting from consideration mortgage loans, since lenders in effect don't have an option there. They have to use the models mandated by Fannie Mae, which are FICO 04 (TU and EQ) and FICO 98 (EX).

Re: who is still using old FICO models?

K-in-Boston — Wed, 30 Jan 2019 02:33:44 GMT

US Bank pulled TU 04 for my Cash+ card in 2017, which was the norm. However, I got their Altitude Reserve in November and don’t recall ever receiving a truth in lending notice with the score disclosure. They pulled Experian instead of TU. Since the card only has one APR for everyone and I was approved, technically they didn’t have to furnish that.

Re: who is still using old FICO models?

Anonymous — Wed, 30 Jan 2019 10:05:39 GMT

I think as consumers we tend to think of the new models as better. A banks appetite for risk tends to determine when and if they move to a “new” model. A newer model may add more or less weight to a factor that does not align with how the bank wants to assess risk.

i read that FICO 9 (I think) places less weight on medical debt vs. other type of debt. That’s just an example. Bank A might decide they don’t like that and stick with a previous model.

Re: who is still using old FICO models?

Anonymous — Thu, 31 Jan 2019 03:18:02 GMT

Hey CGID! While not the correct [scoring] forum here, I was just curious about the addition of your new account and its impact on your scores. What was your AoYA prior to the new account? I got the impression that didn't app often and that perhaps your AoYA was high, so it's always interesting to hear about the impact of a new account. No doubt you also took the standard triple HP from Cap One.

Re: who is still using old FICO models?

Anonymous — Thu, 31 Jan 2019 05:15:17 GMT

My AoYA was 13 months when my EQ mortgage score was almost perfect (817).

My AoYA was 22 months when my EQ mortgage score had taken the big plunge. That was a couple weeks ago.

My AoYA is still 22 months, since the Cap One card has not yet appeared on my reports. I just pulled my reports on Karma and reconfirmed that.

The big drop, as far as I can understand it, has to do with the much greater number of accounts reporting a positive balance. Total util is still 1-3% and individual util is < 8% for all revolving accounts both when the score was near perfect and after it had dropped. My AAoA and AoOA had increased so that was certainly not the cause of the drop.

Re: who is still using old FICO models?

HeavenOhio — Thu, 31 Jan 2019 14:22:50 GMT

From time to time, it pops up in the credit card discussions that Capital One uses an old Equifax score. Was this the classic FICO 04 or the bankcard version?

Re: who is still using old FICO models?

Anonymous — Thu, 31 Jan 2019 19:22:24 GMT

Classic EQ 04

Re: who is still using old FICO models?

Thomas_Thumb — Thu, 31 Jan 2019 21:17:51 GMT

Elan (Fidelity Visa) was using TU 04 at the end of 2017. Can't say if things changed since.

Re: who is still using old FICO models?

Anonymous — Thu, 31 Jan 2019 21:19:10 GMT

I'm not sure it's indicative of what WyHy uses to make credit decisions but according to their site they provide TU 04 score to their members.

Do the credit unions that provide mortgage scores usually use them when applying for credit?

Re: who is still using old FICO models?

EW800 — Sat, 02 Feb 2019 13:36:03 GMT

Nice topic CGID! I have also wondered about creditors that just don't seem to want to move to much more recent FICO scores, wondering if for whatever reason they do not have as much confidence in the new scores in their particular environment, perhaps internal costs involved in making such a change or wanting to keep everything on a level playing field.

I know it takes many years for a new model to catch-on, however sometimes I feel like FICO 9 really has not caught on all that well.. I very well could be wrong, but just a personal observation.

Re: who is still using old FICO models?

Anonymous — Sat, 02 Feb 2019 14:19:46 GMT

Thanks man. Yeah, I know I find the whole question interesting.

The biggest reason why any big institution is slow to transfer is just the general cost associated with transition -- even there is a new product that is better. A classic example is the operating system (OS) for personal computers. At my place of work we only recently finished transitioning to Windows 10 (from Windows 7). Admittedly Windows 8 was a bad product (from the perspective of a business) but still Win 10 has been out for quite a while -- even if you date that from the point where its first big service pack was released.

So in the case of Wells Fargo, for example, they stayed with FICO 98 until that model was almost 20 years old before transitioning to FICO 9. My guess is that its not because FICO 8 or FICO 9 were bad models from WF's perspective -- they probably would have admitted that (considered in a vacuum) they were likely quite a bit superior to FICO 98. It's just the high cost of the transition.

The transition cost is enough to explain (in my opinion) why a company wouldn't jump from FICO 8 to FICO 9. And since so many companies standardized on FICO 8 I can see why FICO 9 still has little traction -- the transition cost is making the companies want to wait for FICO 10. I am curious though whether we might see in 2019 groups like Cap One (say) who are using FICO 04 or earlier switch to FICO 9, much like Wells Fargo did (in their case FICO 98 to FICO 9).

I wonder whether the fabled holy grail of Trended Data analysis is something that groups are hoping to see in FICO 10. It's reportedly in Vantage 4.

Re: who is still using old FICO models?

Revelate — Sat, 02 Feb 2019 17:22:28 GMT

Internal cost is basically the same assuming the cost from the bureau is identical; actually, I was at a lender that made the switch from EX FICO 2 to EX FICO 8 in less than an hour once the CEO said do it. Zero prep time actually, was nearly a flight of whimsy from the outside looking in from an operations perspective, and it made no difference to anyone else in the organization either other than UW was getting a different score for a given file.

Typically lenders will run side by side two scoring algorithms and see how they perform, if one performs better at assessing risk for their customer set, they will switch to it: more profitable, or better able to compete on rates, either one is a win from a financial services perspective.

As for smaller lenders, especially CU's, if you're not rigidly focused on maximizing every single interaction for profit (don't get me wrong, they aren't against profit it just isn't quite the zealous chase it in some others) or if you don't really have the abillity or want to spend the time and money doing the analysis, if you have a workable algorithm for you, keep using it.

Presumably at some point lenders will move from an old algorithm at gun point basically from the bureaus, but certainly for the mortgage trifecta scores that won't happen till the GSE's change their UW policies, just no chance.

Ultimately there may not even be impetus and it's not exactly a well known thing: I couldn't even tell you what the bank I currently am on contract at uses for it's underwriting for loans and I actually have interest in such things.

Re: who is still using old FICO models?

Revelate — Sat, 02 Feb 2019 17:31:35 GMT

@Anonymous wrote:
I'm not sure it's indicative of what WyHy uses to make credit decisions but according to their site they provide TU 04 score to their members.

Do the credit unions that provide mortgage scores usually use them when applying for credit?

Usually; most FICO scores are provided under the FICO Open Access program, which basically says if you pull a score during your account reviews you can provide that directly to your customers.

It's rare to see a freebie FICO score where the lender is using something different for UW; admittedly not 1:1 but it's a pretty safe bet, especially when we're talking Credit Unions.

One glaring exception to that is mortgage underwriting: don't care what freebie score you're getting, you're 99.99% likely to get the typical mortgage trifecta on that pull, but admittedly those pulls are usually done by a third party anyway (Credco, Innovis, etc) even for big giant mortgage lenders.

Re: who is still using old FICO models?

SouthJamaica — Sun, 03 Feb 2019 01:52:14 GMT

@Anonymous wrote:
I applied recently for my first Cap One card (the Savor) and was surprised to see that they used the old FICO 04 model (drawn on EQ) rather than FICO 8 or 9. Not wildly surprised, just mildly.

Does anyone know of any other big lenders or CC issuers that use FICO 04 or earlier? Wells Fargo was one, but they transitioned to FICO 9 last year I think.

FICO 9 was released 4.5 years ago, and FICO 8 was released ten years ago, so you'd think that we'd be getting to the place where most banks would have moved to one or the other of them.

PS. I am omitting from consideration mortgage loans, since lenders in effect don't have an option there. They have to use the models mandated by Fannie Mae, which are FICO 04 (TU and EQ) and FICO 98 (EX).

In my experience:

Aspire FCU - EX FICO 2

Digital CU - EQ FICO 5

Hanscom FCU - EX FICO 2

Service CU - EX FICO 2

Unify FCU - EX FICO 2 or Auto 2 (not sure which)

Re: who is still using old FICO models?

SouthJamaica — Tue, 05 Feb 2019 02:36:37 GMT

Another institution pulling an old model:

ESL Credit Union pulled either EQ Bankcard 5 or Auto 5.

Re: who is still using old FICO models?

tcbofade — Wed, 06 Feb 2019 17:22:20 GMT

Amalgamated Bank of Chicago uses Experian 2.