There are a number of different companies that provide software to banks and consumers for determining the credit scores of Americans applying for credit or mortgages. The biggest of these companies is FICO® (Fair Isaac Corporation). Two years ago,FICO® announced that it would be making changes to its credit scoring formula-FICO® 9. However, it’s only now that FICO® claims that banks have begun to adopt their new formula at a more accelerated pace. What this means, exactly, no one outside of FICO®- in the real world – really knows. Consumers beware…we believe this FICO® 9 software to either be an easy way for FICO® to talk its banking clients into paying huge upgrade fees, or a way to make predictive lending models spit out results that are more favorable to the lender and unfair to the borrower. Maybe both.
The differences of FICO® 9
The following are some of the differences between FICO® 9 and the previous credit scoring software, FICO® 8:
Getting your FICO® 9 score
Even though the Fair Isaac Corporation claims that FICO® 9’s changes are widely approved of, it’s still not as widely used as FICO® 8, much less FICO® Classic. One of the reasons for this is because it can be expensive for lenders to change their underwriting process. It takes a huge amount of time to test any new scoring model. Also, many lenders, to include Fannie Mae and Freddie Mac (the quasi-governmental agency that handles nearly every mortgage processed in the country) remain happy with the older FICO® Classic model. Although there are a number of ways to access your FICO® Classicscore, there’s only one way to access FICO® 9 and that’s through myFICO – and you will have to pay a fee. This may change eventually, if FICO® 9 ever becomes adopted by the big banks and the US Government (Fannie Mae/Freddie Mac), but that is highly doubtful to us.
The Fair Isaac Corporation claims that FICO’s new credit score formula contains a number of changes that should help to improve the credit scores of consumers. Believe it? Yeah right…looks to us like this is just another “hide the truth behind a curtain of pretty flowers” kind of scenario. Consumers beware!
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