More FICO Confusion.
Posted on August 19, 2010
Filed Under Consumer Protection
Anyone who has ever purchased a vehicle from Indiana Chevrolet Dealer or some other dealership knows how long and how much of a hassle the whole process can be. They take and take and take from you; all your personal information, your patience, and your time. The whole process can be incredibly frustrating, and if you are shopping at a higher end place like Acura St. Louis you might find yourself negotiating more than you care to. Well, the folks at Fair Isaac Corp. have made that process hopefully a little easier. It might be confusing at first, but once the dust settles, it should be a good thing for everyone, consumers and dealerships like VW Arizona alike. The credit score inventors have decided to revamp their scoring process once again, this time hopefully making it easier for dealers and lenders to finance more people.
FICO 8 is already being used by about 2,500 banks, dealerships, and other financial places of business. Corporations still have their choice of using either the new system or the older one, but sooner rather than later everyone will convert to the new scoring system. FICO 8 will still work off of a 300 to 850 point scale range, with people who fall in the 300 to 499 area considered high risk. The new system will say that low risk people are those with scores of 800 to 850.
But, the accuracy of the new scores has increased so much that lenders can be more confident lending to a greater population of people because the new system is able to predict risk much more accurately. Or some lenders and dealerships may choose not to change their cutoff score and thus they will incur less losses over time. But, turning people away will not help you sell cars! With how reliant our society has become on computers, payment histories are able to change more quickly and are far more accurate. As consumers are able to change their credit score quicker, lenders can feel more confident lending to people and know that hopefully they will not default on loan payments.
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