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Why do credit unions use older FICO models

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Super Contributor

Why do credit unions use older FICO models

It seems that credit unions favor using older FICO scoring models than banks do.

 

Does anyone have a handle on why that is?

 

 


Total revolving limits 649500 (568000 reporting)
FICO 8's EQ 710 TU 733 EX 717



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Super Contributor

Re: Why do credit unions use older FICO models

Interesting question, SJ!  Curious to hear what people say.  I assume you are including under the rubrik of "bank" all big for-profit credit card issuers, even if they are known primarily for their cards and not as a place to have savings and checking accounts.  Amex, for example.  I think they use FICO 8, right?

 

I do know that Wells Fargo is an exception to the rule you are suggesting.  They use really old FICO models.  FICO 98 if I remember right.

Message 2 of 6
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Regular Contributor

Re: Why do credit unions use older FICO models

Two suggestions:

 

1) Perhaps the older products are cheaper to subscribe to or to implement technologically, and good enough;

 

or

 

2) Credit unions tend to be more conservative in their loan underwriting than for-profit banks, so perhaps they are hesitant to adopt less-tested (and probably more forgiving) models

Message 3 of 6
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Senior Contributor

Re: Why do credit unions use older FICO models

Before my small branch was bought out by a large, local CU, they used V3 TU for personal loan and CC app's.  It was pretty sweet, lol.


Message 4 of 6
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Legendary Contributor

Re: Why do credit unions use older FICO models

Once a score is developed, the creditor must evaluate what it means.

That requires an understanding of scoring model that created it.

 

Shifting to a new model requires retraining of employees on the affect of using any new model on the resulting score.

Smaller creditors may not wish to incur such costs.......

Message 5 of 6
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Valued Contributor

Re: Why do credit unions use older FICO models

Amex uses EX-08 as their base score, but I bet they add their own special sauce to it.  Basically, I think they use an internal score.  Chase is known to use CARS for credit cards.  US Bank uses TU-04 BE.   Cap1 primary score is EQ-04 scores. And as has been mentioned WellsFargo is at EX-98 BE.  It is time consuming and expensive to evaluate a new credit model.   It isn't just small CUs that haven't updated to the newer models. 

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