|
Fico 2008 We take all the pain to keep our scores intact and improve it just because it defines
our credit behavior and capability. Due to lack of awareness we go ahead and engage repair companies to accomplish the job
whereas it can be easily done by us. Leaving that aside, the credit score which is a three digit number defines us financially.
Fair Isaac has been the standard scoring system to calculate scores.
This year will see the introduction of the Fico 2008 by spring,
which is the name of the new model. This model has been created on the request of lender’s and for their better understanding
of credibility of a consumer and calculating credit risk. Given the number and amount of defaults, lenders require a stringent
policy to decide upon credible consumers. Hence the FICO 08.
Let’s get the introduction to the new form of calculation and
its implications. FICO 08 will be more merciful towards a petty mistake from the consumer’s side but repeated errors
will be severely penalized. There will be at least 5% to 15% decrease in the defaults rates as predicted by Fair Isaac. The
score range remains the same so does the factors to be considered while calculating. However this model will more prominently
distinguish between the “bad risks” and “good risks”. This would be exercised for sub-prime lenders
mainly.
The scary part is that two people with the same credit as per the prevalent model will
see diversified scores with the introduction of the new one. The consumers with better variety of cards will be dealt with
more care whereas the customers consuming high percentile of available credit will face the tough conditions of the FICO 08.
So get ready to face a tough credit life ahead!!
|
