SAN JOSE, Calif. (3/11/14)--A new FICO scoring model that will arm lenders with a more accurate reading of credit risk will be released this summer. It will be the first retooling of the widely consulted credit rating system in six years (American Banker March 7).
While FICO, a San Jose, Calif.-based analytics firm, has said it will continue to look at payment history and balances when computing credit scores, the new "FICO Score 9" model also will delve into post-recession data specific to a consumer's spending and credit habits, and how those habits have evolved over the past six years.
"For lenders, FICO 9 is a good thing because it gives them a more laser-focus on where a person is in that spectrum of being able to repay debt because it's in nobody's interest to give credit to someone who's not ready to take on credit," said Anthony Sprauve, senior credit specialist at FICO.
Consumers who have held on to strong credit scores may watch their numbers creep up a bit, while those with scores that "need work" may see their scores lowered, Sprauve told American Banker.
Similar to the current calculation, the new score model will span all major credit product lines, including mortgages, auto loans, credit cards and personal loans.