Drop in Credit Scores May Influence Next Release of FICO Score
SCOTTSDALE, AZ--(Marketwire - July 19, 2010) - (CIC) Many credit experts were surprised on May 12 to learn FICO.com is reporting 25% of all Americans now have a FICO score below 600, putting them into the "bad credit" category. What does that mean for the current credit scoring model -- will it be adjusted to take in account credit defaults and missed payments occurring due to the current credit crisis?
Kristy Welsh has been talking to numerous consumers who are adamant this is the case -- essentially theorizing that the credit scores will be "graded on the curve." Wishful thinking? Welsh talked to Craig Watts of FICO.com about the theory: "Actually, consumers are partially right in what they are sensing in the market place."
"Since the release of the FICO score in 1989, the scoring model is continually being updated to be as predictive as possible. This always includes current market conditions -- meaning the credit crunch could be a factor in one way or another." Is there a new FICO model in the works? Watts confirmed the FICO folks are hard at work on potential enhancements for the next FICO score model release to follow FICO 08. Despite the work towards a new model, there is no scheduled release date. Watts explained some banks are still "kicking the tires" on FICO 08, testing its predictive abilities in granting new consumer credit.
And for those folks sitting on the sidelines with low credit scores waiting for things to improve or perhaps the next FICO model? Welsh says to put into practice what industry experts have been touting for years: keep your credit card balances low, make your payments on time and keep a vigilant watch for identity theft by pulling your credit report at least every 6 months.
CreditInfoCenter.com is a free one-stop destination for consumers looking for advice and tips on how to repair and rebuild bad credit and maintain good credit. Kristy Welsh is also the author of Good Credit Is Sexy, a tongue-in-cheek guide to managing your credit. Welsh is an advocate of showing readers everything they need to know to repair credit themselves, as many positive corrections can be made for the cost of a postage stamp.