Two down one to go, FICO 08 at Equifax is live

06.16.09
By John Ulzheimer

Knock knock...Experian, oh Experian, did you notice what happened last week? Equifax, your friends in Atlanta, announced that they have made available FICO 08 effective immediately. This only leaves you, Experian, as the lone holdout of making available the best FICO® score to lenders. TransUnion made FICO 08 available earlier this year and customers have already started the conversion process.  

Now, this is going to get confusing so follow me…“BEACON 09 is the Equifax name for our FICO 08 score” said Robert Duque-Ribeiro, vice president and general manager of Scoring for FICO. So, in reverse, FICO 08 will be known as BEACON 09 at Equifax. BEACON is the commercial branding of the FICO “Classic” risk score at Equifax and has remained as such for twenty years now. Each time FICO and Equifax release a new version of BEACON, the name changes slightly. Over the years there has been BEACON, Enhanced BEACON, BEACON 5.0, BEACON 96 and others that I’m sure I’ve forgotten. The point is that BEACON is the FICO score based on Equifax data.

Notwithstanding the aforementioned confusion, consumers can still hold their horses because FICO 08 – ‘er, BEACON 09 – won’t be available for you to see any time soon. FICO’s method of providing you with access to your scores happens through their consumer unit, called myFICO, and myFICO won’t be selling you your BEACON 09 score until a critical mass of lenders has converted to it. That doesn’t happen overnight. In fact, it can take a lot of nights.

Now the pressure is squarely on Experian as the holdout. This is significant since many lenders, especially mortgage lenders, like a score to be “tri-bureau” before they’ll take the time and expense to convert to it. FICO 08 isn’t like older, newer versions of the FICO score. It’s significantly different not only in architecture but also in features and benefits to both consumers and lenders. For example, did you know:

• With FICO 08, collections and public records with an original amount less than $100 are bypassed? This means consumers with these pesky low-dollar derogatory items won’t see lowered scores for such delinquent amounts, although it’s still wise to pay them.
• With FICO 08, the process of “piggybacking” your way to a better score won’t be possible. No sense in buying your way onto someone else’s credit card as an authorized user. FICO put the kybosh on that.   
• With FICO 08, consumers who have high credit card utilization, meaning that their credit card balances are high in comparison to their credit limits, will be penalized more because FICO’s research has concluded, obviously, that those of you who are running up larger credit card balances are more risky today than you were in the past.  

The take-away for consumers and lenders is that scores across the bureaus could be wildly different, even more so than in the past when score generations were inconsistent. This is why we may see more resistance to conversion. Lenders don’t want to see Molly MaxedOut’s FICO scores vary from 700 at TransUnion, 710 at Equifax and 615 at Experian, which is entirely possible.

Stay tuned. I’ll let you know when Experian decides to install their version of FICO 08, which might be called the Experian Fair Isaac Risk Score 2015 at this pace.

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FICO 08 is now available at both TransUnion and Equifax - no word on when Experian will offer the score.