How New FICO Score Model Will Effect Consumers Shopping for a Mortgage

Fair Issac Corporation, the supplier of the most widely used credit score model released a new and improved model called FICO 08. The new credit scoring model is intended to greatly improve the system's ability to predict the chances of a borrower defaulting on a loan. The model is intended to be more forgiving of occasional slips by consumersbut will take a harder line on repeat offenders.

The new version of the FICO score will look the same to consumers and lenders. They have retained the same scoring range and the model will continue to look at the same factors to determine scores but it will tighten the screw for sub-prime borrowers with low credit scores, little credit history or those who are seeking credit too actively and too often. But it will no longer penalize consumers who can manage several credit types at the same time.

Thanks to this innovation, lots of credit consumes are likely to see improved credit scores. But the new scoring model will make it harder for those customers with bruised credit or customers with little credit history to build or improve their credit file as it will not take into consideration credit card accounts of an authorized user commonly known as "piggybacking".