Another change is coming soon to how credit scores are calculated. The Fair Isaac Corporation (FICO) is a credit score reporting company that provides a score to judge your creditworthiness for lenders.
It’s anticipated the scores of people with already low scores may drop even lower, and people with high credit scores may actually increase, creating a larger gap between lower and higher risk consumers.
The company has announced they will begin using FICO 10 T the latest version in the scoring system sometime this summer.
FICO said in a press release:
“By adopting the FICO Score 10 Suite, a lender could reduce the number of defaults in their portfolio by as much as ten percent among newly originated bankcards and nine percent among newly originated auto loans, compared to using FICO Score 9. The reduction in defaults is even higher for newly originated mortgage loans, at 17 percent compared to the version of the FICO Score used in that industry. These improvements in predictive power can help lenders safely avoid unexpected credit risk and better control default rates, while making more competitive credit offers to more consumers.”
If you want to get your score, log in and check out the benefits section of your credit card account. Most issuers like Discover and American Express offer free credit scores.
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