October 5, 2009

The all new FICO 08 has BIG Surprises for you

by Ty Crandall

Fair Isaac has released their much anticipated FICO 08 scoring model. This new credit scoring formula has many differences relative to its predecessor FICO model.

FICO 08 is the first major change in Fair Isaac?s scoring model since the 1980?s. Fair Isaac predicts this new scoring model will better predict risk of default by 5-15% over its predecessor.

Many experts estimate this figure to be as high as 50%. FICO 08 has been released in 2009 in response to changing economical conditions and the demand for a better risk model.

FICO is used by most financial institutions so understanding the new changes are crucial. Many lenders will quickly be integrating this new scoring model into their underwriting systems.

Many of the underlying principles of FICO will remain the same. This includes the score range of 300-850 which will continue with the new model.

One of the mostly highly welcomed changes is that collection accounts with initial collection balances less than $100 will not have any impact on the credit score.

Very small collections such as small medical bills will no longer have an affect on the credit score if the initial balance on the account was less than $100 at the onset of the account on the credit report.

The new model will also be more forgiving on consumers who are late in one area, but not late in other areas on their credit. So if a consumer is occasionally late on a credit card account, the score change will be less than if that consumer was consistently late on all their payments.

The effect of an authorized user account will also change with FICO 08. There will be no more ?piggybacking?. This is when a customer with challenged credit gets added as an authorized user to accounts of someone with good credit to increase their scores.

With FICO 08 their will only be a score improvement for authorized user accounts for the consumer?s immediate family.

If the consumer has too few accounts, completely closed accounts, or has inactive accounts, the damage to the score will be more than other FICO models.

FICO 08 now contains between 12- 16 scorecards estimated. This is versus the 10 prior scorecards that existed with the prior FICO model. These scorecards are mathematical models that are used to assign a credit score.

Each scorecard is specific to an industry. For example the Auto Industry Option Scoring Model uses its own scorecard and weighs past auto history heavier than all other accounts while computing a credit score.

FICO will be a big upgrade for Fair Isaac. Most lenders and the credit bureaus are quick to implement this new model due to its increased ability to accurately predict credit risk.

For more questions on credit scoring and the enforcement of consumer credit rights visit www.PerfectCreditFast.com.

About the Author:

About the author: Ty Crandall is an international authoritative expert on credit scoring and credit law. He has over 12 years experience in the financial and credit fields and is currently the CEO of Elite Credit Incorporated. To have your credit fixed FAST and to obtain credit repair for loan approval, please visit www.PerfectCreditFast.com. a

Tags: small medical bills, Elite Credit Incorporated., Option Scoring Model, initial collection, credit law, credit score

Filed under Bad Credit by Ty Crandall

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Comments on The all new FICO 08 has BIG Surprises for you

November 7, 2010

moneyordergo @ 7:59 am

Home loans for people with bad credit] | Indian media says Obama visits hit the right notes: Obama's Democrats l…

November 20, 2010

The Devil @ 8:42 am

The following may very well be a "nanci" story but I suspect there is more than a grain of truth!

I am told that the Closed Bretheren community which is one of the most business savvy groups on this island do NOT insure their assets or persons beyond what is required by law e.g. motor vehicle third party insurance.

One story goes about the time a closed brethren member was negotiating a large loan from a bank on Broad Street. The manager was not from Barbados and was ignorant about the closed bretheren. He insisted that insurance be purchased consequent with the loan approval. The bretheren member told the manager that he didn't believe in insurance and anyway should anything happen by way of death or destruction the loan would be repaid with the help of the bretheren community. This foreign manager persisted and said he would turn down the loan application if insurance was not taken out. The bretheren asked him if he knew anything about them (and their accounts). He said he didn't care, "banking principles are banking principles!" Well news of this got to those higher up in the bank. The bretheren guy got his loan without any insurance requirement and the manager was sent packing back to where ever he had come from!

December 5, 2010

WweOverTheLimit @ 2:48 am

cool?

December 8, 2010

credit_debt_web @ 5:37 am

Repeating the Process With an Online Car Insurance Rate | Auto …: There's improvement in your credit rate – Yo…

December 30, 2010

Betty6844 @ 11:52 am

New Blog Post: Guaranteed Car Loan Approval Might Be Easier Than You Think: If knowing that a guaranteed car loa…

January 2, 2011

truckinwife @ 7:00 am

Where can I get a home improvement loan,when I have bad credit?

January 6, 2011

Jimmy, Hanover MD @ 6:14 am

To whom it may concern:

Reasons why Citibank sucks. My wife and I were recently "upgraded" to the Citi World Elite credit card. What a joke and horrible experience that "upgrade" has been to date. It was pitched to us as having more features and benefits, but our mileage has varied greatly. Let me start by saying that I have been a long time loyal Citibank customer for 11 years and I pay my balance in full every month (and we charge everything so it's not a small amount).

About six months ago, Citibank decided that my 10 year old account was no longer viable and issued me a new account number under the guise of an "upgrade." Well issue number one with that was that they didn't tell me (although their customer service will swear differently). That's great and all, but never mind the fact that I had my HOA fees, gym membership, Electric Bill and Cable bill all auto debited to my credit card. So by not telling me I had a newly "upgraded" account number, I incurred late fees with all said auto payments to my now defunct old credit card number. Thank you Citibank.

I eventually worked all of my auto payments out to the new number, but the headaches didn't stop there. It turns out that the new card was designed to never be usable. I have been declined about two dozen times over the past six four months due to, "our fraud detection system is working on your behalf." What a load of crap. Here's an example: I go the the Columbia Mall (about 15 mins from my house) and then go to the grocery store a block from my house…guess what!?! Declined at the grocery store since my card was in two different zip codes within 20 minutes. Are you kidding me? And let's not dismiss the snarky attitude of the operator over seas all the while being condescending to me.

My wife and I like to travel and I can honestly say that in the past six months, we've been declined on our card in every state and country we have visited. I'd like to emphasize again that I am a customer of 11 years who has always paid his balance in full every month. It's to the point to where I feel humiliated, embarrassed and feel like I am rolling the dice every time I use my card. Does Citibank care when I call to voice my concurs…hell no. The person over seas doesn't care and tries to get me off the phone as quick as possible. When I ask a question that doesn't fit their operator script, I am put on hold and asked to take a Customer Satisfaction Survey. Oh the arrogance. What a joke!

The last straw came this afternoon when I called customer service for the second time after being declined at my local grocery store…again. I was told that my, "card has a bad security code embedded in the magnetic stripe" and that's why I was declined…again. Crap, crap, crap. Lies, lies, lies. I am done with this company. There are plenty of other money hungry credit issuing monsters out there who will at least buy me dinner before they F me. Screw you Citibank, I'm out.

January 10, 2011

GNAProd @ 9:23 am

is? that terminators? on the commander

January 12, 2011

kev3d @ 7:22 am

January 13, 2011

theinvestorkid @ 5:43 am

HAMP Loan Modification Help for Completing Your Application: This can increase your chances of getting approval …

January 19, 2011

rodarodaroda88 @ 10:36 pm

I was absolutely mesmerized through this whole movie. I don't? believe I've ever seen this type of story ever made so brilliantly in live-action or animation.

February 10, 2011