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All bureaus now offer FICO 08

Monday, July 27
Posted 3 p.m.

Bankrate reporter Leslie McFadden contributed this entry.

FICO, the Minneapolis company that created the popular credit score, announced on Wednesday that the latest version of its scoring model, dubbed FICO 08, will be available at the three largest credit reporting agencies by the end of July.

More than 400 lenders have begun using or testing the new scores, according to a FICO press release.

That's a steep adoption curve, notes John Ulzheimer, president of consumer education for San Francisco-based Credit.com and CNBC contributor. "Basically it's the fastest they've ever seen adoption of a new scoring model."

For now, consumers still won't be able to get their Experian FICO scores through myFICO.com.

And currently, FICO scores purchased from myFICO.com don't yield scores computed by the new scoring model. "Consumers won't see those scores until at least one of the bureaus reports that lenders are asking for scores from that particular computer model version, the FICO 08 model, more often than they are scores from the older FICO models at that bureau," says FICO spokesman Craig Watts.

In January, FICO principal scientist Ethan Dornhelm told me that most lenders use FICO models that date back to 2004. Through myFICO.com consumers get Equifax FICO scores from the '04 model, but receive TransUnion scores computed by a 1998 version.

When the switch to the new version at myFICO occurs, you aren't likely to notice. Consumers are not told which version they are purchasing.

The new scoring model has the same range of 300 to 850, with higher scores representing lower credit risk.

One of the main differences between this edition of the scoring model and prior versions is that it will reduce score impact from the abuse of piggybacking. Piggybacking occurs when people with poor credit inflate their score by getting a person with good credit to add them as an authorized user on their account. Parents may do this to help their kids establish credit, for example. FICO has said it will still allow legitimate authorized user accounts to be scored.

The model will minimize score inflation where the authorized user doesn't have a legitimate relationship to the primary cardholder -- a situation that occurs when people pay strangers via credit repair firms to add them onto their trade lines. The company won't disclose how it will distinguish legitimate authorized user accounts from their abusive brethren.

FICO 08 will also have two more scorecards than previous versions that only had 10. That is, it will be a more refined version, with better segmentation within the model. Low-risk consumers should score higher and high-risk consumers should score lower.

Questions? Comments? E-mail Plastic_Rap@Bankrate.com.

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