FICO 08 Credit Score Now Available From Equifax

June 10, 2009

Consumer credit reporting agency Equifax and FICO have introduced a credit risk product for lenders and other businesses. Dubbed Beacon 09, the new Equifax score is based off of Fair Isaac's FICO 08 methodology.

FICO said that lenders who adopt the Beacon 09 score are likely to see improvements when assessing the risk of applicants opening new accounts, people who have previous derogatory information on their credit report and those who are new to credit.

Some lenders, generally smaller ones who can switch over their systems more quickly, are already using the FICO 08 score with TransUnion LLC, which began offering the score to lenders in January, says Tom Quinn, vice president of global scoring at FICO. Larger lenders will take longer to switch over.

But with two of the three major credit bureaus starting to make FICO 08 available to lenders, it's likely that some consumers could start seeing changes in their FICO scores.

In many ways, the new system has similar features to the old one. Consumers will still receive a score between 300 and 850, and the minimum scoring criteria has not changed.

But important changes have been made to how this version weights certain transgressions.

- Collections and public records with an original amount less than $100 are bypassed -- This means consumers with these pesky low-dollar derogatory items won't see lowered scores for such delinquent amounts.
 

- The process of "piggybacking" your way to a better score is no longer accepted. It won't be possible to buy someone else's credit card as an authorized user.
 

- Consumers who have high credit card utilization will be penalized more because FICO's research has concluded that those of you who are running up larger credit card balances are more risky today than you were in the past.

"The model tends to be harsher on consumers carrying a higher debt load compared to previous versions," Quinn told the Wall Street Journal. But the newer version is also more forgiving of one-time slipups, so those who otherwise pay their bills on time could see their scores improve. "We're seeing movement on both sides," he says.

But regardless of whatever version of FICO that lenders are using, there has been a "noticeable movement into lower scores," given the economic slowdown and rise in delinquencies, says Quinn. The silver lining is that some consumers' scores are improving as they pay down their balances, avoid applying for new credit and continue to pay their bills as agreed, reported the Journal.