More consumers nearing perfect FICO® Scores, but are scores improving?

My colleagues in FICO Labs monitor FICO® Scores and how they move over time. In our most recent review, we continue to see the effects of consumers’ scores moving up AND down. At the high end of the score distribution, the number of consumers in the 800-850 range is at...

FICO® Scores and inquiries—the facts

There always seems to be a lot of interest in how the FICO® Score is impacted when a consumer applies for credit. In truth, these credit inquiries account for a relatively small percent of the score (less than 10%, in fact). Because of ongoing interest, let’s walk through some interesting...

Making the most of score differences

I previously blogged about how a consumer’s FICO® Score may vary from one CRA to another, due mostly to differences in data reported to each of the credit reporting agencies. This begs the question: when pulling scores from more than one CRA, which should be used for credit decisioning? The...

Credit Reports ≠ Credit Scores

More than ever, consumers are interested in their credit scores and credit reports. They ask questions when banking, paying bills online and shopping for a loan. This puts pressure on lenders to equip their employees with good answers to such questions. (myFICO.com is one source for those answers.) Unfortunately, this...

Score differences across credit bureaus reflect true data differences

I recently had the pleasure of speaking at the Philadelphia Federal Reserve Bank’s Community Development Studies and Education Department’s conference “The Impact of Workout Options on Borrower’s Credit Reports and Scores.” The conference was well attended by regulators, lenders and consumer credit and housing counselors. FICO’s research on the score...

Recession causes FICO® Score swings

Last month I posted that the national distribution of FICO® 8 Scores has had two major shifts during the recession. Some readers were puzzled that the observed shifts weren’t significantly larger, in light of the sour US economy. Actually, what appear to be small national shifts are quite dramatic changes,...

Credit Counselors Stumped

This week, hundreds of credit counseling executives gathered in San Francisco for the annual leadership conference of the National Foundation for Credit Counseling. I participated on a panel to address what The New Credit Normal promises for consumers. As I explained, regulators are helping to empower consumers by having creditors...

FICO® Scores Shift During Recession

A comparison of nationwide FICO® Scores from 2005-2011 illustrates that score distribution has remained relatively stable at a national level. However a close look at the numbers suggests that U.S. lenders have experienced two distinct phases of consumer credit risk in the recession thus far. Early in the recession, lenders...

10 Most Confusing Things About Credit Scores

In a recent joint “TweetChat” with Bankrate.com, we fielded hundreds of questions from participants on the specifics of a FICO® Score. Their questions ranged from basic to complex, reminding us that as consumers become more credit savvy, the complexities of the FICO Score can still be confusing even to a...

More Scoring Myths: Closing Credit Cards

Recently I blogged about common FICO® Score myths. Here’s another widespread misconception: People believe that their credit scores should improve when a credit card account is closed. Not true. In all likelihood, closing a revolving credit account either will not affect the FICO® Score at all, or it will cause...

Dispelling common scoring myths

If your experience is anything like ours, you’ve found that some banking customers harbor strange ideas about credit scores. Here are several myths about FICO® Scores that we hear often. Myth: To get a high score, run up high balances on your credit cards. Contrary to what some believe, using...

Join FICO for a Live Interview on Credit Scoring on Monday, May 16

Next Monday, Bankrate.com’s Leslie McFadden will conduct a live interview about credit scores with FICO blog author Careen Foster, director of Scores product management. Specific topics of discussion will include the Credit CARD Act, risk-based pricing rules, the inclusion of alternate data in credit scores and building a credit score...

No Pre-Set Spending Limit Cards: Friend or Foe to the FICO® Score?

There has been a lot of buzz around a new type of hybrid—not a car, but a card! Some lenders are increasing the issuance of revolving cards with no pre-set spending limit (NPSL). Also known as flexible spending accounts (FSA–not to be confused with a healthcare spending card), these hybrid...

Clearing away the fog around HELOCs

Home Equity Lines Of Credit are an odd hybrid, offering the convenience of revolving credit and the security of a real estate-backed loan. Perhaps that’s why lenders are sometimes puzzled about the role of HELOCs in calculating FICO® Scores. For instance, we often get asked whether HELOCs factor into the...

Paying off a trade line in collection

Credit scores hold true to the axiom that “Actions speak louder than words.” How each of us acts toward credit and creditors has proven to be highly predictive of our future repayment risk. FICO has found that some consumer actions are more predictive than others. One that we are often...

Does making a high salary automatically mean one is a good credit risk?

We receive thousands of consumer questions, feedback and thoughts about credit scores through our myFICO.com portal. I would be a wealthier person if I had a dollar for every time I have heard … “there is no way my score is this low because I make a lot of money!”...

How do short sales affect a FICO® Score?

There appears to be quite a bit of confusion with consumers and mortgage professionals about how FICO® Scores consider and treat the reporting of a mortgage related short sale. In fact, I have seen and heard it be claimed that a short sale is not considered negative by the FICO...

FICO® Scores in mortgage lending — a few facts

When it comes to FICO® Scores for mortgage origination, several myths remain frustratingly hard to kill. Case in point: They resurfaced again in a recent column in the New York Times. It’s worth restating some of the plain facts about the use of FICO Scores in mortgage — facts that...

How do FICO® 8 scores change the score distribution?

One reason there are more consumers today with scores at the high and low ends of the 300-850® score range for FICO® Scores is that we have improved the FICO scoring models. The newest version — the FICO 8 Score — is a stronger predictor of future credit risk. Because...

How much do FICO® Scores change over time?

- Posted by Tom Quinn, FICO® Score Product Manager There has been a lot of focus on the changing FICO® Score distribution recently. The topic that naturally goes hand-in-hand with this is score migration: In other words, how much do individual borrowers' scores change over time. Every time the FICO®...

FICO® Scores drift downward

- Posted by Tom Quinn, FICO® Score Product Manager A comparison of nationwide FICO® Scores from 2008, 2009 and 2010 indicates that consumer credit risk has increased over the past two years. The distribution of FICO Scores drifted down slightly on FICO’s 300-850® score range and score performance shifted in...

How does tax lien information impact the FICO® score?

- Posted by Tom Quinn, FICO® Score Product Manager Skipping mortgage payments definitely hurts your FICO® score. But what if you don't pay your property taxes? A tax lien is a matter of public record and the FICO® score includes in its risk assessment any derogatory public records listed on...

Welcome to the FICO Banking Analytics blog — why are we here?

- Posted by Tom Quinn, FICO® Score Product Manager Today's bankers are information junkies. We should know - as the creators of the FICO® score and other predictive analytics solutions, we are constantly providing our clients with new research and insights into credit trends. We created this blog to share...