Changes to FICO® Scores

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Changes to FICO® Scores

January 28, 2020

In the last few days you may have heard the buzz about changes to FICO® Scores and the impact that these changes could have for consumers, including the rather alarming headline from the Wall Street Journal, that kicked it all off: “FICO Changes Could Lower Your Credit Score.”

FICO and other credit scoring companies release new scoring models from time to time with the goal of creating more predictive scores to allow lenders to extend credit to more borrowers confidently and at better rates on average.  Overall, if lenders can see a more accurate picture of this risk, they can expand credit confidently and responsibly.

While shifts in credit scoring models will likely have negative impacts for some, and positive impacts for others, the fundamental best practices in credit coaching remain the same: On-time payments and reduction of debt will continue to be the key drivers of credit score improvement.

It is certainly important to track changes in credit scoring, however, here are some reasons why we don’t need to panic, and how we can help ease concerns from our clients/customers as well:

  • The changes that FICO are making to their scoring will apply to NEW models only (FICO® Score 10 and FICO® Score 10T), not to the current and more familiar models on the market. These new scoring models are still several months away (at least) from being available to lenders.
  • As this article points out, there are many different credit scoring models used by lenders and businesses. Many lenders, are still using older models of FICO® Scores, and haven’t even updated to the more recent models (such as FICO® Score 9) available that include more consumer-friendly protections and enhancements.
  • Again, we, and our clients, can rest assured that while there are differences across scoring models, a focus on underlying positive credit actions will benefit any credit score improvement.

CBA is committed to tracking updates in the credit industry, actively working with our industry partners to learn more about these new scores, and supporting practitioners in understanding these developments. In the meantime, don’t miss out on the following opportunities to increase your knowledge and understanding of credit scoring in general.

Opportunities to Learn More!
  • CBA’s upcoming Credit as an Asset 6-week virtual course. We will explore a plethora of topics related to credit building, including a deep dive into credit scoring models. Learn more and register here.
  • Pre-Symposium Practitioner Training Day at CBA’s upcoming 7th Annual Credit Building Symposium in Washington, DC. This training day will include the always highly anticipated FICO Boot Camp, which will surely cover the new developments that we have heard about this week. Learn more and register here.