Fair Isaac Upgrading FICO score To Close Loophole

Fair Isaac Corp. announced tha it will adjust its FICO credit rating scoring formula to close loopholes. The new FICO score formula won't include authorized user accounts -- users on credit cards who are not responsible for paying the balances but are approved to make purchases with the cards.

The company's action comes after lenders raised concerns over "credit renting", which allows people with bad credit to piggyback on strong payment histories of credit card holders.

The company said an adjustment in the new system, dubbed "FICO 08," removes authorized user accounts from consideration by the scoring model in its previous system. Fair Isaac expects to become available to lenders starting in September.

Fair Isaac said it will work closely with lenders to help them implement and benefit from the FICO 08 score as it becomes available.

(June 7, 2007)