Fair Isaac Corporation (FICO) announced a new update to the FICO® score that will be appearing this summer just in time to make that new home purchase. It is not clear whether FICO 9 will be good for consumers or not.
The FICO® score takes into account hundreds of factors for an individuals that are meant to indicate that person’s likelihood of repaying for that debt. The exact formula is not known but there are some general guidelines to go buy. Your credit score is weighted 35% Payment History, 30% Credit Utilization, 15% Length of Credit History, 10% New Credit Application, 10% Credit Mix. Beyond this basic formula the calculation is all nuanced. Some hints as to the changes in the new FICO 9 were given by Anthony Sprauve, senior consumer credit specialist at FICO. He said in an article to Credit & Collections Risk that the new formula will take into account post recession spending habits where the old formula was based on spending habits from eight years ago. The goal is to predict the risk associated with lending to that individual.
FICO 9 will be available to each of the major lending groups in which FICO provides the algorithm. There will be a different formulas for mortgage, automobile, credit cards and personal loans rolled out later this year. It may take several months after the roll out for credit experts to really figure out whether the changes have been good or detrimental to consumers.
You can count on our law firm to stay on top of the changes to the credit score formula so that our clients can achieve the highest scores. We help clients that are having financial difficulty and can not file bankruptcy. We help our clients resolve issues directly with their creditors instead of disputing at the credit bureaus.
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