New FICO 08 Credit Score Rolls Out

Jan 30, 2009

Fair Isaac Corp. is rolling out its new-and-improved FICO score, but it's likely to take a while before consumers see how they stack up under the new system, the Wall Street Journal reported.

On Thursday, Fair Isaac and one of the three major credit bureaus, TransUnion LLC, will start offering the revamped score, dubbed "FICO 08," to lenders. Equifax Inc. is expected to follow in the second quarter.

The new score is supposed to do a better job of predicting borrower defaults, be more forgiving of one-time slipups and take a harder line on repeat offenders. The score, which will still range from 300 to 850 -- the higher, the better -- is fine-tuned to do a deeper analysis of subprime borrowers or those with "thin" or young credit histories, according to Fair Isaac.

More consumers with accounts in good standing should also see their scores increase slightly, says Tom Quinn, vice president of global scoring solutions at Fair Isaac. Overall, Fair Isaac predicts FICO 08 will improve the accuracy of lending decisions by as much as 15%.

FICO 08 will still factor in credit-card accounts for authorized users, such as children or spouses. Fair Isaac had originally planned to exclude authorized users in order to curtail abuse by "credit repair" Web sites. Such sites arrange for people with poor credit to boost their scores by becoming authorized users on accounts held by strangers with better credit. But Fair Isaac tweaked its model in a way that will still help legitimate authorized users improve their credit scores -- although perhaps to a lesser extent than prior FICO versions would -- but would also protect lenders from people who were trying to game the scoring mechanism, reported the WSJ.

The Journal noted that it could be months or even years before the score is widely available to consumers. Lenders typically do their own analysis on the score to see how it works with their business and loan portfolios before they start using it.