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Tracy
Becker
President
North Shore Advisory,
Inc.
155 White Plains Rd. Suite 203
Tarrytown, NY
10591
Co-Author
"The Credit Solutions
Kit"
Phone 914-524-8300
Fax
914-524-5014
Visit
Website
-Tracy's educational
seminars
-Downloads of our newsletter for your website
-Blog
with articles about current credit news |
New Scoring
Systems for Equifax
Equifax is the 2nd
of the 3 Credit Reporting Agencies to make the new Fico '08 credit
scores available to lenders calling them Beacon '09 scores. Of
course they say this score is the best and easiest way of acessing
risk levels. Why is it that every company says the same thing
when a new score model is introduced? This score is now
being offered to lenders, but it has been reported that the smaller
lenders are the only ones choosing to use it since the
implementation process is complex.
This new score is
more forgiving to consumers with 1 derogatory in the recent past who
have been current on all credit prior. It also will not
reflect those low scores we see when people open new accounts.
It will be more sensitive to high balances and scores will drop even
further then the decreases we see now from balances that are close
to limits. Another factor in this new model will be the use of
authorized credit card accounts (PIGGYBACKING) to increase
scores. To stop the abuse of this practice the score will see
less of a boost from authorized credit accounts.
Trans Union has
been offering the new Fico '08 scores since January '09 but they
have not seen a great leap in lenders to apply this model because of
complexities in adapting it just like Equifax. Experian
sits on the side line and will likely fight to get its own Vantage
score in there rather then using the Fico '08 model. Experian
has pulled its information sharing for use directly to the consumer
by myfico.com since February '09. Fico would not share profits
with Experian and there is currently a law suit pending. It
will be interesting to see what Experian does in the future.
We will keep you
posted. |
