Seen in the Wichita Eagle:
Credit bureaus are expected to adopt a new version of the widely used FICO credit score this year that will no longer benefit so-called “authorized users” on another person’s credit card account.[...]
The move is in response to the controversial practice of “piggybacking,” in which some Web sites allow consumers with poor credit scores to hitch on to someone else’s good credit record.[...]
Called FICO 08, the new formula also will be more forgiving of occasional slips by consumers but will take a harder line on those who are repeatedly late on their bills. The FICO score ranges from 300 to 850.[...]
TransUnion expects to have the new FICO scoring model “available for customer testing during the second quarter of 2008,” said spokesman Steven Katz.
Experian doesn’t have a date for adoption of FICO 08, said Rod Griffin, manager of consumer education. “We’re working with FICO on the technical issues and on implementation, but we don’t yet know what the date will be,” he said.
Equifax is apparently standing aside for now, due to an ongoing squabble with Fair Isaac.
Fico has been pushing for the credit industry to more modern models for a while now, since a bit before my prior life where I worked on credit scoring for an insurer. It’s a little amusing that it’s taken a scam to push through change at two of the three bureaus.
Of course, as the new models roll into production, I expect to see some consumers and consumer advocates become introduced to the notion of just how different a consumer’s scores can be under two different models, which should make for some “entertaining” debate. That, plus I half expect to see some additional fuel supplied to the fires of those who don’t understand and don’t like the nuances of differences in what data is collected by the individual bureaus.
(Note to the type A personality folks watching their scores—the actual 3 digit numbers aren’t necessarily significant. A 20-50 point swing isn’t terribly significant, as long as you’re still passing the hurdle rates. Besides non-mortgage-based lenders mostly use their own, proprietary models anyway. Fico scores these days are only really important in the mortgage world, where a standardized model is necessary to securitize the mortgages as well as to prescribe standards for Fannie Mae and Freddie Mac.)
