Much like Larry Page likes to change Google’s algorithm, credit reporting agencies (CRA) like to revamp their scoring model, just to keep us on our toes. This summer, the widely used FICO score will be completely redesigned as a new scoring model knows as the FICO Score 9. The consumer lending industry relies heavily on the FICO scoring system, having purchased over $10 billion in scores just last year. The benefit of this 2.0 revision is that FICO 9 will address the inconsistency that is seen when comparing all three scores from the major credit bureaus (Trans Union, Experian and Equifax).
The good news is the scoring range will remain the same, 300-850. However, this new calculation may very well impact where your credit score will fall. Experts say, if you are already in a higher credit bracket, you can expect that score to rise. Conversely, if you have a low credit score, prepare for it to plummet based on using the new model.
Over 90% of lenders rely on the FICO score to determine whether or not to loan to a consumer. FICO Score 9 claims to analyze risk with more accuracy than the currently used FICO Score 8, measuring how each individual’s credit habits have evolved over the last 6 years. How long has it been that you’ve looked at your credit score? You can visit this page to find out just where you stand, because knowing is half the battle.
image courtesy of Danilo Rizzuti and freedigitalphotos.net