Equifax offering Fico 08 scores to lenders

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.

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