Changes in Spring to Fico Scoring (NO, not '08 AU)

[Anonymous]

I concur!

I have previously heard about all of the changes detailed in this thread in the context of FICO 08.  There are other changes taking effect with FICO 08 besides the one involving AUs.

[Anonymous]

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@Anonymous wrote:

I concur!

I have previously heard about all of the changes detailed in this thread in the context of FICO 08. There are other changes taking effect with FICO 08 besides the one involving AUs.

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Well I say let's all AU's report back, if I was a betting man I'd put most everthing I have that AU will NOT happen in 'Fico '08'.

[RobertEG]

Recent article on FICO 08;;;;

Because Fair Isaac doesn't want rivals to copy its formula, it isn't giving out too many details about the new changes, but spokesman Chris Watts did say this:

Fair Isaac currently divides the population into 10 segments based on credit history and applies a different formula to each. Eight segments include people with good credit, and two are for people with serious problems.

Under the new system, the population will be divided into 12 segments: eight for people with good credit and four for people with bad credit. That could result in a slight change -- up or down -- in many scores.

"This new system will give lenders more dependable scores for those higher-risk consumers and those who have little history," Watts said.

Watts concedes that certain groups will feel the effect far more than others. People with thin credit history or poor credit will likely see their score either jump or drop significantly, he said.

As it goes with most change, there are some people who are going to be hurt through no fault of their own.

One adjustment to the current credit scoring system will be to stop giving credit points to those who are authorized users on someone else's credit card.

This change will affect about 30 percent of people with credit reports, or about 60 million consumers, said John Ulzheimer, president of educational services for Credit.com and a former manager with Equifax and Fair Isaac.

"When they close this loophole, it will eliminate millions of authorized users and their scores will go down," Ulzheimer said. "This is a very, very big deal."

This change is going to affect young adults trying to establish credit by attaching themselves to their parents' credit cards, spouses -- mostly women -- who are authorized users on the family credit card, and people who are trying to reestablish credit by coattailing a family member's good credit history.

Fair Isaac has closed this loophole because the lending industry has complained about abuses and said that the loophole was distorting borrowers' true credit risk.

[Anonymous]

I hate to have to chime in each time they post this but sorry, it will NEVER happen. NEVER. Let's all meet back here in September and see how many AU's dropped. It won't happen. Scare tactics.

[RobertEG]

So, myccc, are you saying that FairIsaac is intentionally lying in its public press releases as a "scare tactic?"  Waht would be their motivation in doing that?  Sure, whether lendors choose to use the new FICO 08 model once released or continue to use the old model  is up to each lendor, but why would FairIsaac intentionally release misinformation about their new model?  I dont get your drift.....

[Anonymous]

I think the truth is there is a lot of turbulence these days in the whole consumer credit atmosphere, and changes and rollouts and whatnot that had been set for certain times may be delayed or may in fact never happen.

[Anonymous]

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@RobertEG wrote:

So, myccc, are you saying that FairIsaac is intentionally lying in its public press releases as a "scare tactic?" Waht would be their motivation in doing that? Sure, whether lendors choose to use the new FICO 08 model once released or continue to use the old model is up to each lendor, but why would FairIsaac intentionally release misinformation about their new model? I dont get your drift.....

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I'm saying that for whatever reasons, probably political, Fair Isaac is making noises about 'fixing the AU loophole', but is very aware that doing so will open it to massive lawsuits and it will be far more trouble then it is worth. It won't happen.

Now the only thing that gives me pause in all this, are the *current* political winds, what with all the ineligible borrowers getting loans during the 'predatory lending'.

I'd imagine that things will stay the way they are; most CC's will use the model as it exists, for larger lines or for mortgages, they either will (or will be forced t0) manually review reports in part to discount an AUs and really examine credit-history, not just rely on a score.

[rom828]

I wonder with the new 12 divisions, how one is classified as being in the 4 with bad credit.

I have 14 accounts: mtg, auto loans, retail and credit cards, on my report.

I do have an unpaid c/o from 05-05 that I've been researching on this forum as to how to handle and think I've decided...waiting to hear back from another member.

I have a paid c/o from 11-03 and a PR  10-98 for a state tax lein. That one shows 04-04 release but I have no record of pyt then.  I'm trying to get corrected pay date from state as my avaialble records go back to 2000 and I dont have a pyt showing from then til now, so good chance this one will come off sooner than it now indicates.

All my other accounts show paid or paying as agreed.  I do need to work on paying down my 2 CCs to improve my utilization, and when I take care of the unpaid C/O the util. will really go down, as the unpaid am't is half my util.

With what I previously read about the new 08 scoring, I felt pretty encouraged that I'd see a jump as I don't have a lot of reaLly recent bads and all these other  good accts.

I just wonder how I'd be classified.  I'm still a little confused with how buckets are determined with the current system.  I think from what I read it's possible that when my PR comes off I could go in a bucket that's scored more stringently and my score could actually go down.

I just can't wait til I get my score to the point where all this won't really affect me that much and I can quit obsessing about my score!!

FICO EQ 633   FICO EX 640  FICO TU 654

[RobertEG]

Great insights!  I recall that FairIsaac released a "new version" of FICO a few years ago (I think it was called Improved FICO, or some silly new neat nomer like that), and that the creditors stayed away from it in droves.  So, I think the observation that, regardless of what FairIsaac intends or does not, it will  be their clients who determine which version of FICO prevails. Certainly, they will not discontinue the sale of the current version, and if clients do not want to exchange their current, comfortable well-understood and well-worn shoes for a new pair of shoes that create callouses, they are are a business,, and wont forgo the $$$.

Just like Clinton/Obama/McCain, it is packaging that is the attempt to sell, but it is ultimately the decison of the  consumer/voter to determine the new czar.