There's a New FICO in Town

Fair Isaac announced that FICO 08 is now being offered to businesses. TransUnion is the first of the three major credit bureaus to market the latest FICO score version – FICO Risk Score, Classic 08.

FICO still ranges from 300 to 850, but will do a better job of analyzing subprime borrows and those with thin or young credit files. Those with a single late payment won’t receive as much damage to their credit scores while chronic late payers will see lower scores. Consumers with good payment histories should see a slight increase in their credit scores.

Though Fair Isaac previously planned to remove authorized user accounts from the credit scoring equation, they’ll remain. Fair Isaac came under fire for not recognizing borrowers who faked high credit scores by paying to have themselves added to accounts in good standing. (See Can You Buy Better Credit? for details.) Fair Isaac was able to modify the scoring algorithm so people who were legitimate authorized users would see higher credit scores, but also so that lenders would face less risk from sneaky consumers and credit repair companies.

For now, FICO 08 is only available to businesses through TransUnion. Equifax is expected to begin offering the new model later this year. Experian has not stated when or if it will adopt it. Consumers probably won’t have access to it for months or even years, says the Wall Street Journal.

Sources: The Wall Street Journal, Fair Isaac press release More on FICO Scores and Credit Scores:

• FICO vs. FAKO Credit Scores
• The Credit Score Calculation
• Get a Free Credit Score