The many flavors of FICO:__Editions, versions, and variations

[Revelate]

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@jello77 wrote:

@Anonymous,

@Anonymous wrote:

Since FICO 04 is still the dominant standard, and since lenders use the middle score, surely that would mean that historically mortgage decisions have been skewed in favor of Experian and TU data, with Equifax much of the time being ignored?  (At least for people with good credit.)

It's a bit like a grad school saying that it was going to look at the grades in my three classes, and consider the middle one -- but doing so knowing that professor X never gave his best students any higher than a B+ whereas professors Y and Z gave out lots of A-pluses.  What's the point of acting like the three grades mean the same thing?

You make a very good point that is rarely mentioned.  Since each credit agency uses a different FICO score range to "grade" loan applicants, a person's three credit score can vary significantly between the agencies even when all credit information is identical.  Therefore, arbitrarily using the middle score to make a loan decision could be regarded as mathematically illegitimate.

You also make another key point when you say:

My guess is that for people with low, average, or average-plus credit, the three scores are much closer together (assuming identical data in the reports).  But the closer you get to having VERY good credit, the less it matters what your Equifax file says, since it is going to get dropped anyway.

If lenders were asked to justify why they use a mathematically illegitimate method to make loan decisions,  I suspect they would might say this:

The differences in FICO score ranges have an effect on scores primarily at the very top end of the range (over 800).  People with such high scores will almost always get loan approval, so the range differences have little practical effect on them. For people with scores below 800, the range differences have only a minor effect on scores, and are very unlikely to have any practical effect on loan approvals.

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Doesn't matter really, though the lenders are irritated by it based on the marketing anouncements for FICO 9.  Underwriting guidelines are just a hurdle to be cleared, and the score is the score is the score.

It's only somewhat recently in the grand scheme of things that lenders started pulling from multiple bureaus, and seeing a 30 point swing in the scores means a great deal when they're trying to evaluate risk profiles of customers.  Mortgage lending always got around this by simply throwing out the high and low score, which over a larger dataset isn't a terrible idea though over 3 scores is admittedly a little suspect from a data analysis standpoint, but for others (hi BOFA!) that pull one score for opening, and then find on a AR that it's completely different on identical data, well I can see where that creates issues for dialing in their profitability metrics and underwriting guidelines as a result.

[Anonymous]

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@jello77 wrote:

The many flavors of FICO:

A summary of FICO editions, versions, and variations

(Updated 7-15-2014)

One of the first things a newcomer to this board learns is the importance of distinguishing between FICO and FAKO scores. FAKO refers to the many non-FICO scores being sold by various companies. FAKO scores have little value since few of them are actually used by lenders and they do not match closely to FICO scores.

But even when you stick with FICO scores, confusion can ensue because FICO scores have many different editions, versions, and variations. On a single day, a consumer could theoretically have dozens of different FICO scores, depending on which version, sub-version, and credit agency is used to produce the score.

This post provides a summary of the many available FICO versions.  The information has been obtained from numerous sources, and I hope all is correct. Please feel free to offer corrections or updates to anything in this post, and I will edit them in.

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The FICO scoring model with its familiar range of 300 to 850 was first introduced in 1989. Since then, FICO has released four major revisions to the model. The approximate dates of the revisions are 1995, 1998, 2004, and 2008. Each FICO "edition" uses a different formula and produces a different score.

When a new FICO edition is released, many lenders continue using an older version for many years before "upgrading," just as many computer users stay with older versions of software. The 1995 FICO revision is no longer in common use, but the three later editions are still used by lenders.

Each FICO edition is commonly known by the year in which it was released: FICO 98, FICO 04, and FICO 08 (although FICO officially calls it FICO 8, without the zero).

In March 2014, FICO announced a new edition called FICO Score 9 would be introduced in summer 2014.

As of 2014, FICO 08 is reported to be the most commonly used by lenders, although most mortgage lenders still use FICO 04. 

For each edition of the scoring model, FICO produces several variations. In addition to a standard or "classic" version, FICO offers "Industry Option" versions customized for lenders such auto, mortgage, insurance, and credit cards. These industry versions have a different score range of 250 to 900, and they produce scores that are not fully comparable with the classic FICO versions.

Adding an additional layer of complexity is the fact that each credit agency (Transunion, Equifax, and Experian) uses customized versions of each of the various FICO editions and industry sub-versions. As a result, a consumer's FICO scores from each agency may differ even when all credit information is identical among the agencies.

Because there are so many different versions of FICO scores, whenever a score is received, it is helpful to know which version it is. If a lender provides a credit score to you, ask for details such as which credit agency was used, which FICO edition was used, and whether the score is an Industry Option version. The lender may not always be willing or able to provide the answers, but it doesn't hurt to ask.

Special note about "real-world" score ranges:

When providing information to consumers, FICO always states that the range for standard or "classic" scores is 300 to 850. However a little known fact is that the actual, real-world score ranges are not 300 to 850 for all FICO classic versions.

For many years, the real-world score ranges were known only to financial professionals and rarely disclosed to consumers. In 2009, a change in the federal credit laws required greater disclosure of information to credit applicants. As a result, the real-world score ranges began to appear on documents credit applicants received from lenders. The formerly "secret" real-world score ranges began to become increasingly well-known.

The fact that real-world "classic" score ranges are not always 300 to 850 was confirmed to me in a private email from John Ulzheimer, a former employee of both FICO and Equifax and a well-known author and expert on credit scoring issues.

In the summary shown below, I have included the actual, real-world minimum and maximum scores for each FICO edition for which I have obtained this information.

In addition to John Ulzheimer, I want to thank posters GregB and To-Be-Continued from this board who first made me aware of this information.

Linked below is an example of a document showing real-world score ranges for each of the three credit agencies:

http://www.krollfactualdata.com/kroll-factual-data/media/assets/PDFs/RBP%20Letters/H-3.PDF

Linked below is a document on the Transunion web site. On pages 14 and 15, it shows the same real-world score ranges for FICO 98, FICO 04, and FICO 8 that I have cited below.

http://www.transunion.com/docs/rev/business/financialservices/FS_ModelsOverview.pdf

Shown below is a list of the FICO editions now in common use, along with the names used by each credit agency for their standard or "classic" version of the model. The "common names" are those often used by posters on credit-related message boards.

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FICO 98    (introduced about 1998)
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____Transunion
________Official name:   FICO Risk Score, Classic 98 (formerly called Empirica)
________Common name:  TU-98
________Available directly to consumers:   from MyFICO when buying Transunion FICO score
________Real-world score range:  336 to 843     (as shown on page 15 of this Transunion document:   http://tinyurl.com/q3k2hwu)

____Equifax

________Official name:   Beacon 96
________This version appears to be seldom used, but a poster reported it used on a mortgage application in 2014.
________Available directly to consumers:   no

____Experian
________Official name:   Experian/FICO Risk Model v2
________Common name:   EX-98
________Available directly to consumers:   Some credit unions such as PSECU provide it free each month to members.

________Real-world score range:   320 to 844     (as shown on this Experian document:   http://tinyurl.com/ndcsqxs)

NOTE:
As shown above, the maximum score possible with FICO 98 is Experian 844. In 2009, a poster named bulbisaur achieved this maximum 844 score. A post from him that includes an image of the three FICO scores (TransUnion, Equifax, and Experian) that he obtained in 2009 from MyFICO can be seen here:   http://bit.ly/1tq32ta

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FICO 04   (introduced about 2004)
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FICO 04 is the standard used by most mortgage lenders. All three scores will normally

be pulled and the middle score (not the average) will be used by the lender.

____Transunion
________Official name:   FICO Risk Score, Classic 04 (formerly called Empirica)
________Common name:  TU-04
________Available directly to consumers:   no
________Real-world score range:   309 to 839     (as shown on page 14 of this Transunion document:   http://tinyurl.com/q3k2hwu)

____Equifax
________Official name:   Beacon 5.0
________Common name:   EQ-04
________Available directly to consumers:   Can be purchased from Equifax with their "Score Power" product. Some credit unions such as DCU provide it free each month to members.                                                                                             

________Real-world score range:   334 to 818

____Experian
________Official name:   Experian/FICO Risk Model v3
________Common name:   EX-04
________Available directly to consumers:   No

________Real-world score range:   325 to 850     (as shown on this Experian document:   http://ex.pn/W5hFJ2)

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FICO 8   (introduced about 2008)
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The real-world range for "classic" FICO 8 scores extends fully up to 850.

____Transunion
________Official name:   FICO 8 Risk Score (also sometimes called FICO Risk Score, Classic 08)
________Common name:   TU-08
________Available directly to consumers:   Some credit cards issuers such as Discover, Barclays, and Walmart provides it free each month.

________Real-world score range:   341 to 850     (as shown on page 14 of this Transunion document:   http://tinyurl.com/q3k2hwu)

____Equifax
________Official name:   Beacon 09

________Common name:   EQ-08
________Available directly to consumers:   from MyFICO when buying Equifax FICO score

________Real-world score range:   300  to 850

____Experian
________Official name:   Experian/FICO Risk Model v8

________Common name:   EX-08
________Available directly to consumers:    from MyFICO when buying Experian FICO score

________Real-world score range:   316  to 850     (as shown on this Experian document:   http://tinyurl.com/pkdcygb)

How FICO 8 differs from previous versions is explained here:   http://www.myfico.com/crediteducation/questions/fico8.aspx

NOTE 1:

In June 2013, a poster named geronimo2008 reported obtaining the highest possible score of 850 from Experian, as described in this post:   http://bit.ly/1kNuvnO

In May 2014, a poster named android01 reported obtaining the highest possible score of 850 from all three credit agencies, as described in this post:   http://bit.ly/1pAon2H

NOTE 2:

Linked here is a 2011 press release describing a study of FICO 08 scores:   http://bit.ly/1k6H8ui

From a sample of 250,000 credit reports, it found that 0.02% had a FICO 8 score of 850, or about 1 out of every 5000 persons.

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FICO Score 9   (introduced 2014)
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In March 2014, FICO announced a new version called FICO Score 9 would be available in summer 2014, as described in this press release:

http://www.fico.com/en/about-us/newsroom/news-releases/new-version-industry-standard-fico-score-will...

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FICO NextGen   (introduced 2001)
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In 2001, FICO released a scoring model called NextGen which is claimed to be a major improvement over the "classic" FICO models. In producing a score, NextGen tracks many more factors.  But it has failed to catch on with lenders because its score range of 150 to 950 is incompatible with the familiar 300 to 850 range, requiring lenders to recalculate cutoff scores and revise many rules and policies.

Only a small percentage of lenders reportedly use NextGen.

____Transunion
________Official name:   Precision
________Available directly to consumers:    no

____Equifax
________Official name:   Pinnacle
________Available directly to consumers:   In 2014, Pentagon Federal Credit Union (PenFed) began to provide this score free to its credit card holders, as discussed in this post:   http://bit.ly/1p0Yyb7

____Experian
________Official name:   FICO Advanced Risk Score
________Available directly to consumers:    no

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PHENOMENAL post!!! Thank You for "all" this valuable information!!! I'm glad I nosied around to find this, it answered all my questions precisely, avoiding me to post any questions, when the answers are all right here!!! Thanks again, myFICO forums is such a great concept!!!

[New_Beginning]

Awesome post.....tons of valuable information. Bookmarking this 

[Anonymous]

Oh, thank you for this. I am a newbie and was so confused!!

[vanillabean]

Come to think of it, has the Experian/FICO Risk Model v3 (04) ever been used for anything?

[jello77]

my-own-fico said:

Come to think of it, has the Experian/FICO Risk Model v3 (04) ever been used for anything?

As the original poster, I'm wondering if I made a mistake about something.

My post says:

FICO 04 is the standard used by most mortgage lenders. All three scores will normally

be pulled and the middle score (not the average) will be used by the lender.

I included this statement because I have seen many posts on this board saying that FICO 04 is used by mortgage lenders.

But some sources say that for Experian, the version used by mortgage lenders is Experian/FICO Risk Model v2, which is actually FICO 98, not FICO 04.

Can anyone confirm what Expersian FICO version is used by mortgage lenders?

If it turns out to be FICO 98, I will change my original post to explain that mortgage lenders use FICO 98 for Experian and FICO 04 for Equifax and Transunion.

[Revelate]

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@jello77 wrote:

my-own-fico said:

Come to think of it, has the Experian/FICO Risk Model v3 (04) ever been used for anything?

As the original poster, I'm wondering if I made a mistake about something.

My post says:

FICO 04 is the standard used by most mortgage lenders. All three scores will normally

be pulled and the middle score (not the average) will be used by the lender.

I included this statement because I have seen many posts on this board saying that FICO 04 is used by mortgage lenders.

But some sources say that for Experian, the version used by mortgage lenders is Experian/FICO Risk Model v2, which is actually FICO 98, not FICO 04.

Can anyone confirm what Expersian FICO version is used by mortgage lenders?

If it turns out to be FICO 98, I will change my original post to explain that mortgage lenders use FICO 98 for Experian and FICO 04 for Equifax and Transunion.

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I had thought it was already up to date?

FICO Risk Model v2 is indeed the score seen on a tri-merge pull which is the gold standard for mortage underwriting as dictated by the GSE's, and it's a '98 algorithm based on the public declarations on Experian's site.

Re: v3 being used for anything: undoubtedly it was, likely still is in some areas such as some credit unions, but not in the mortgage market as I understand it, and most of the major credit card issuers have already moved on to FICO 8 or one of it's industry options.

[jello77]

Revelate said:

FICO Risk Model v2 is indeed the score seen on a tri-merge pull which is the gold standard for mortage underwriting as dictated by the GSE's, and it's a '98 algorithm.

Thanks for this confirmation.

I updated the original post to say:

Most mortgage lenders use FICO 04 for Equifax and Transunion, and FICO 98 for Experian.

[vanillabean]

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@jello77 wrote:

Most mortgage lenders use FICO 04 for Equifax and Transunion, and FICO 98 for Experian.

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And still do, it would appear from the freshly compiled merge credit report for DW and my mortgage preapproval. It’s bound to be fascinating reading.

[Anonymous]

I have seen it said elsewhere on the boards that the upgraded ScoreWatch score for TU is 08.  Is that correct, or is the sticky accurate that you still get FICO 98 when you buy your TU score?