Your FICO score may look a little different starting this summer. The company is releasing a new version of their credit-scoring product, the FICO Score 9, designed to provide more accurate risk assessment across different industries.
It can be confusing for consumers to figure out which credit score really counts when applying for a personal loan, a credit card, a mortgage or a car loan. That’s because each of the three major credit bureaus—Experian, Equifax and TransUnion—keep their own consumer records and each issue their own scores.
The FICO score is separate from these credit bureau scores, though all of them draw consumer data from similar sources. The new FICO scores aim to be more consistent with scores from the credit bureaus and provide a clearer picture of consumer activity in order to give potential lenders more accurate insight when making decisions about issuing credit.
FICO scores used by many industries
When consumers apply for a new line of credit, a loan, even a job or an apartment, potential lenders, employers and landlords look at the applicant’s creditworthiness before making a decision to extend credit, a job offer or a lease. Major credit card issuers, auto lenders and many other businesses utilize the FICO score. The new FICO score model aims to provide an accurate picture of consumer behavior that will provide insight to a variety of inquiries from different places.
“To become a widely adopted industry standard, a credit score must work well across all industries,” explained James Wehmann, FICO’s executive vice president of scores.
The new scores are the first product release in a line of updated FICO scores, which will soon include industry-specific credit scores for things like credit cards, car loans and mortgages.
Free FICO scores
In the past, consumers had to pay to find out their credit score, but since late last year, FICO scores have been available free through the FICO Score Open Access program. Credit issuers like Discover and Barclaycard also make FICO scores available to consumers on their monthly statements at no extra charge.
FICO scores range from 300 to 850. Anything below about 650 is considered a bad credit risk. Consumers with a score above 700 may be eligible for lower interest rates on loans, better terms on mortgages and more lucrative offers from credit card issuers.