New FICO Formula

[profette_IHB]

Default Lines: The New Math Of Credit Scores

"The company that cooks up credit scores for millions of Americans is changing its recipe -- and that could affect how easily you get credit in the future.

Fair Isaac Corp., maker of the popular FICO credit score used by most lenders, says its new scoring model will do a better job predicting the likelihood of a borrower defaulting on a loan. For one thing, the new model, dubbed FICO 08, will be more forgiving of occasional slips by consumers, but will take a harder line on repeat offenders. Fair Isaac predicts its new system will help lenders reduce default rates on their consumer credit by between 5% and 15%."

 

[socalhousingbubble_IHB]

Profette-

Linky acts like it will work (the pointed finger hand on IE) but doesn't...

Please add the full url.

Thanks

SCHB

 

[IrvineCommuter_IHB]

SCHB: Try this link www.woai.com/mostpopular/story.aspx

 

[rickhunter_IHB]

Here's an article from last year that details "credit renting" changes...

http://www.boston.com/news/education/higher/articles/2007/06/05/fair_isaac_changing_fico_score_formula/

 

[profette_IHB]

SCHB,

Thanks for the heads up. Linky is fixed...

 

[socalhousingbubble_IHB]

Ah, WSJ is always so much more satisfying than the TV news recap. Thanks, profette.

And I want to go on the record as saying that in 5 years or so there will be some form of credit score leniency introduced for those that got "swept up" (I use that very tongue-in-cheek, but that will be the victim's or politician's angle) in the late stages of the housing bubble. A mortagage default on a loan someone never had a prayer of paying back or bankruptcy for a similar reason will gain some sort of special status as "not quite as bad as a mortage default that was underwritten during the sane years" (~pre-2001?). There will still be a negative effect on the credit score, but the punishment will be reduced to appease the idiot masses.

SCHB

 

[lawyerliz_IHB]

Tinkering with FICO is ok I guess, but the problem is the whole idea of FICO.

And I agree with SCHB, in a few years, if we still have a civil society in a few years, this will be treated like an unpayable medical bill, not a deal killer.

 

[rickhunter_IHB]

When was something done in this country to APPEASE the masses? the people???

The FICO was created for BIG BUSINESS and the changes or "leniency " will be done to help BIG BUSINESS.

The "idiot masses" that took advantage in the last few years will be there to take advantage AGAIN!

 

[socalhousingbubble_IHB]

Rick-

The masses will want to buy homes or cars again before the next 7-10 years would expunge these negative events from their credit histories.

Big business may decide that they want to lend to these same folks, and may look for rationalizations that the borrow was a vicitim of circumstance and actually can be trusted. If they see an "untapped" market of people who want to borrow but are sidelined, their motivation will be high.

All it will take is some pandering politician to grease the skids, and presto, you'll have the 2013 Mortgagelender's Victim Recovery Act. Say it with your best GW Bush smirk: "We're just trying to help unsofistimicated Mericans who put their trust in greedy mortage companies toward re-establishing financial well-being."

Sounds harmless enough, right?

SCHB