Fico 9 Score 599 - Fico 8 Score 710 - What gives!?!?

[Revelate]

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@flan wrote:

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@Revelate wrote:

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@flan wrote:

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@Anonymous wrote:

As you have repeated and I agree with most of your points. But....I think the last ppl that would want to see credit scores improve are subprime vultures. Traditional lenders will takes years, if ever, to adopt a new system. My contention, again is all the media articles give only half the story, are very misleading and give false expectations and hope. I have not found anyone who writes on the subject to be reliable from Suze Orman to Dave Ramsey. They are clueless.   I really appreciate your insight and quick reponses. Have a good holiday. Again thanks

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All lenders benefit from having risk models that more accurately reflect risk.  If the FHFA changes their requirements for GSE purchased loans, things will change very fast, depending on whether they continue to accept the fico 04 model (which is known to be not accurate) or insist on a newer model.  (Also interesting will be what newer model they choose; it's quite possible they pick VS3.) 

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I believe the GSE's set the standards for that; if they won't move to a newer FICO product, doubt they'll switch to VS3.

I can't complain to much since I landed in the 720-739 tier which I'm incredibly happy about, but my VS3 is a 768-769 now /boggle.

Granted they could change their UW criteria on their rate sheet too to compensate.

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the GSEs are in a conservatorship managed by the FHFA, who own all the voting shares.  They do whatever the FHFA says, so if the FHFA says change your underwriting standards, they'll change their underwriting.

The new head of the FHFA is no fan of FICO, and has complained about FICO's historical racial bias, and has noted that it's at odds with the GSE's statutory mandate to facilitate mortgage lending in underserved communities.  If VS has a better risk prediction model, it'll be used; it might be used in combination with or as an alternative to fico 9, or it might be used by itself. 

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I don't know that Cecala's comments are accurate; namely the GSE's have always backed all sorts of loans, and that the limitations were really a credit reporting issue anyway.  The alternative scores have to go off different data and that's the way it's done now: if you can't meet the underwriting criteria (in terms of number of tradelines) for traditional FICO scoring purposes, it goes non-traditional.  Good point on the fact that the FHFA will likely get a vote.

That said, if VS does have a better risk model vs. FICO 8 or FICO 9, or one of the mortgage industry options, then absolutely I could see it's being used same as any for-profit or in this case, quasi-for-profit organization and I'm unfortunately too cynical to think there isn't a financial component on this, GSE's are still absurdly financially solvent and that money isn't going to the private sector.  VS has all the same issues with traditional FICO scores though to my knowledge at least from when we're talking the under/unbanked portion of the population, I wouldn't count it as a non-traditional score as a result.

That said if they want to, I'd be happy personally if they did jump into the CRA's lap: my VS 3.0 hit a new high at 769 after I prettied up my balances, my recent mortgage trifecta is in my siggy and my FICO 8 scores are even lower across the board.  On the assumption a 740+ remained a 740+ for mortgage underwriting at least, which it might not if that radical of a shift happens.

[CreditDunce]

I may be reading this thread wrong, but is everyone assuming FICO 9 will be good for most people with bad credit?   I assumed it would be just the opposite.  Yes, if you only have medical baddies, it will help you.  However,  all other unpaid baddies you have will hurt you more in FICO 9.

It also sets up a hobson's choice for someone trying to repair their credit score.  Assuming they have the money, they can pay off their old debts and get a good FICO 9 score.  But it will hurt their FICO 8 and earlier scores.  I believe we will see a "fast" roll out of FICO 9.  But there will still be many CCC's that will never upgrade to FICO 9.     Moreover, mortgages aren't going to move to the new model any time soon. 

Even for CCC's that move to FICO 9, it doesn't mean the CCC's will not see the baddies on your credit report.  A good credit score, doesn't mean they will automatically approve you.  Just like today, some CCC's will deny for new accounts/INQs, some CCC's using FICO 9 may deny for paid baddies and/or medical baddies. 

Standard disclaimer... this is pure speculation on my part.  We don't have any data points yet for FICO 9.  I am also not making any guesses on how FICO 9 will taper off the effect of baddies over time.  It is possible that older baddies may not hurt as much in FICO 9, helping some people with bad credit.

[Anonymous]

Contrary to what others may believe, and I have been in the trenches making these lending decisions. I am an empirical source as to the "speed" at which lenders move, Snails are "The Flash" compared to the financial industry. I think two things on the subject. IF it were ever to be widely used it will be years down the road at a minimum two years and/ or secondly it will never happen. It was prematurely trumpeted and erroneously described , as usual, by the media.

[Thomas_Thumb]

Any news on availability of Fico 9 scores to consumers - either for purchase or through credit card services?

[Revelate]

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@Thomas_Thumb wrote:

Any news on availability of Fico 9 scores to consumers - either for purchase or through credit card services?

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Not yet; I'm guessing we won't have access to them for years.  Not too worried personally as from what I've read so far my FICO 9's should be similar or better than my FICO 8's.

[taxi818]

Well from every bit of infromation given about the fico 9 model . the only thing that is changing is the way they do medical collections and paid collections. So as long as the info on your report is accurate. you should not see much of a difference. in any case. Some lenders have their own internal scoring even when using the fico model. Who really knows what that lender is using. i always say the lower the score they present to you the consumer the higher they try and charge with interest rates. i would just leave that lender behind.