New FICO Scoring Model Coming This Summer
FICO plans to release a new broad-based scoring model this summer that helps lenders analyze a consumer's credit risk with greater accuracy. This product launch will represent FICO's first changes to its scoring model in six years, said Anthony Sprauve, senior consumer credit specialist at FICO.
In an interview, Sprauve could not provide specific features of FICO Score 9 at this time, but said the fundamental way the San Jose, Calif., analytics firm looks at data typically found in credit bureau reports is the same. For example, the product will still review a consumer's length of payment history and balances.
However, FICO Score 9 will analyze post-recession data in terms of how a person's spending and credit habits have changed now compared to six years ago. Consumers who previously had good credit scores will see slightly better scores in the new product model, Sprauve added, while people with scores that need work will perhaps score a little lower.
Overall, lenders will know the risk assessment pertaining to any individual looking to receive a loan or manage their account and whether they are ready to take on debt.
"For lenders, the FICO Score 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," Sprauve says. "The score is about being able to accurately assess that risk."
The FICO Score 9 is a broad-based score. FICO plans on rolling out industry-specific scores for all major credit product lines such as mortgages, auto loans, credit cards and personal loans later this year, Sprauve said.
Lenders purchased more than 10 billion FICO scores last year and nearly 30 million U.S. consumers received access to their score for free. Furthermore, the 25 largest credit card issuers, top auto lenders and thousands of other businesses rely on the FICO score for consumer credit risk analysis and federal regulatory compliance.