Difference between the Old FICO Score and the FICO 08 Score

The FICO credit score is probably still the most widely and commonly used score by lenders. It is also the name that comes to the mind of people when they think of their credit scores. The FICO credit score was started by a corporation known as Fair Isaac Corporation and was one of the first credit scores to be used in the market. In January 2009 fair Isaac updated its credit scoring model and called it the FICO 08 by bringing about certain changes that would enable the lenders to predict the creditworthiness and the risk of consumers better.

The FICO 08 credit score has been designed to try and gauge the risk of lending belonging to a particular section of borrowers which includes sub-prime borrowers, new borrowers and the consumers who do not have much of a credit history in terms of open accounts as well as those borrowers who borrow credit actively. Under the FICO 08, consumers to have a good mix of credit accounts such as credit cards, mortgages and automobile loans will have a higher score than those with only one or two type of credit accounts. Borrowers will also receive points for paying loan balances well below the original amount.

Delinquencies will not hit the consumer who has a strong credit history. Even if one single account of a consumer is seriously late by more than 90 days is credit score won’t be affected so much if he has other deposit accounts that are in good standing on his credit report. But if several accounts are delinquent or late then the credit score will get affected as is normally the case with all the credit scoring models as well.

The rest of the things remained pretty much the same as with any other credit scoring model be it VantageScore or the original FICO score. A high credit utilization ratio will hurt your credit score while a person who utilizes a small amount of the total available credit will see a boost to their FICO 08 credit scores. It could be better for the consumer to have more active and positive accounts than closed accounts. The FICO 08 score will still calculate the credit scoring model by giving British the same factors and in the same proportion: 35% payment history, 30% credit utilization, 15% credit age, 10% recent applications and 10% mix of credit accounts. FICO 08 scores will still range from 300 to 850. Authorized users will be reported on the FICO 08 scores however the model has been designed to be able to distinguish between legitimate authorized users such as next of kin, spouse etc. from those that have been purchased for the purpose of credit repair and credit improvement. Your FICO 08 score will continue to be based on the credit report from the three national credit bureaus Experian, Equifax and TransUnion.

Though FICO 08 is available for use to lenders who use Equifax and TransUnion it was not yet available for purchase to the common consumer at the time that this post was written. There is no information at present as to when the FICO 08 credit score will become available for purchase. For now you can still purchase the previous version of your FICO scores from Equifax and TransUnion from myFICO.com.