Press Release from Minneapolis, MN and Chicago, IL on January 29, 2009
Fair Isaac announced today that TransUnion is the first credit reporting company to offer Fair Isaac’s newest FICO score dubbed FICO ’08. TransUnion will market the new score under the product name “FICO Risk Score, Classic 08.”
Good News for Lenders and Credit Providers = Bad News for Consumers with Average Credit
The new scoring model is expected to provide up to twice the power at predicting a person’s credit risk. This improvement will increase the ability of lenders and credit providers to better manage their current portfolios. The new scoring model will also help them to attain better qualified consumers.
“Lenders striving to increase lending while mitigating risk need improved scoring tools that better assess the disparate risk profiles of different customer segments,” said Craig Focardi, research area director for TowerGroup. “Scoring tools also need to help protect against fraud in new credit applications-which remains a big concern for lenders-while still complying with regulations that permit ’Authorized Users’ to establish credit via an existing third-party account. Lenders, guarantors, loan investors and other parties need new analytics to reinvent credit risk assessment and restore the US consumer lending and loan securitization markets.”
“The FICO 08 score represents Fair Isaac’s best analytic work ever on our classic FICO credit risk model,” said Lisa Nelson, vice president of Global Scoring Solutions for Fair Isaac. “We encourage TransUnion’s customers to adopt the new score and take full advantage of its increased predictive power. We designed it to make their conversion to FICO 08 easier, with no major operational adjustments required.”
The new FICO Risk Score, Classic 08 is going to help lenders protect against authorized-user account “piggybacking” by incorporating new patent-pending technology that materially reduces the potential score impact associated with the abuse of authorized user accounts. By continuing to include authorized user accounts in score calculations, the FICO 08 score continues to support lenders’ efforts to comply with federal regulations (TranUnion.com).
There is some positive news for consumers among all this doom and gloom. The new scoring model will keep the same scoring range of 300-850, score reason codes, minimum scoring criteria, and inquiry treatment as previous versions of the score.
Fair Isaac also has developed two industry-specific versions of FICO® Risk Score, Classic 08 for use by TransUnion clients who offer consumer auto financing and bankcards. TransUnion expects to make these new industry option FICO® scores available to lenders starting in April (TransUnion.com).
Fair Isaac, FICO, myFICO, and 300-850 are trademarks or registered trademarks of Fair Isaac Corporation, in the United States and/or in other countries. Cites taken from Transunion.com January 29, 2009.
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