I couldn't read the whole article due to no subscription but found this if interested.
Thanks for the readable story on the new FICO 10 T Scoring System
Edit: I was informed there was a discussion created for this that started earlier today before this thread in the Credit News section of these forums. Here is a link: https://ficoforums.myfico.com/t5/Credit-in-the-News/FICO-Changes-Could-Lower-Your-Credit-Score/td-p/...
Hi everyone. I did a search in the forums and didn't see any posts about FICO 10. I just read this article which touches on some of the coming changes.
"Fair Isaac Corp., the company behind the popular FICO credit score, announced the launch of its latest FICO 10 model today, Jan. 23, that will start incorporating consumers’ debt levels into their scoring model."
"FICO estimates that about 110 million consumers will see a change to their score under the new credit score model, with most people seeing less than a 20 point swing in either direction. Roughly 40 million will see a shift upward over 20 points and another 40 million will see a shift downward, FICO says."
"“Those consumers with recent delinquency or high utilization are likely going to see a downward shift and depending on the severity and recency of the delinquency it could be significant,” Dave Shellenberger, FICO vice president of product management, said in a statement."
"The new scoring model will also likely create a wider gap between those who are considered good credit risks and those who are not. Consumers who already have good credit, for example, and who continue to whittle down their already existing loans and make on-time payments will see higher scores. But those who score below 600 will see bigger dips in their scores under the new model."
Here's a version of the WSJ article that is not (yet) behind the paywall: https://www.wsj.com/articles/fico-changes-could-lower-your-credit-score-11579780800
Interesting.... And this tidbit:
"FICO also plans to flag consumers who sign up for personal loans, which are generally considered more risky since these are unsecured and typically do not require collateral like a car or a house."
Wonder if/how that may relate to unsecured student loans.
Tending my Garden til 6/2020
Already being discussed here
I don't see many banks jumping to switch to this model since implementing it cost them money but this new scoring model could drive so many people over the financial edge.
How does this cost banks money or drive people over the financial edge?
The way I read this, as one person put, is that utilization will have a memory under the new model. People already spending themselves into oblivion will continue to do so; it's just that lenders might get a bit more of a warning without having to have had historical data on that user on-hand already. If anything, this might save them money in the long-term, and the banks that cater to higher-risk people in return for higher interest rates...well, I suspect they'll just keep on doing that regardless of this new score.