FICO 08 To Be Available To Consumers Soon

Fair Isaac Co., the publisher of the FICO credit score which is widely used by lenders to assess the credit worthiness of a borrower, is rolling out its new and improved credit score system, FICO Risk Score, Classic 08, or FICO 08. Today, Fair Isaac announced that it has teamed up with TransUnion, one of the three major credit reporting agencies, to market the new credit score to clients immediately. However, it could be months before consumers can get a glimpse of FICO 08.

So what’s new in the FICO 08 system?

The new FICO score will still be in the range from 300 to 850 as the current score and it will permit piggybacking authorized accounts, a tactic that many parents use to help their children obtain and establish credit. However, FICO score will incorporate “new patent-pending technology that materially reduces the potential score impact associated with the abuse of authorized user accounts.”

In addition, FICO 08 “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 Wall Steet Journal). The new score will also do a better job in helping lenders identify subprime borrowers and borrowers with less sound credit history.

Obviously, the new score takes more measures to protect lenders than consumers, but lenders may not be as eager to jump in and adopt the new system. They will typical test the score first to see whether the new system can better protect their interests. If not, they may never adopt the new score at all. For consumers, the waiting could be months, if not years.