Equifax rolls out new FICO credit score

06.12.09
By Sarah Beldo

Equifax is the second of the three major credit bureaus to make the newest version of the FICO credit score available to lenders and businesses.

Beacon 09 is Equifax's name for the FICO 08 credit score, which is being touted as the most accurate way yet to predict a consumer's credit risk.

In many ways, the new system has similar features to the old one. Consumers will still receive a score between 300 and 850, and the minimum scoring criteria has not changed.

But important changes have been made to how this version weights certain transgressions.

For example, if you make a one-time mistake and pay your credit card bill late, the repercussions will not be as strong. Those who have been penalized in the past for an isolated error will probably see their credit scores rise.

Meanwhile, "the model tends to be harsher on consumers carrying a higher debt load compared to previous versions," Tom Quinn, vice president of global scoring at FICO, told the Wall Street Journal.

FICO said that lenders who adopt the Beacon 09 score are likely to see improvements when assessing the risk of applicants opening new accounts, people who have previous derogatory information on their credit report and those who are new to credit.

Another feature of the updated score is technology that helps prevent the abuse of "piggybacking," a practice in which a person becomes an authorized user on someone else's credit card in order to build up their credit history.

TransUnion already introduced the new scoring model in January, but so far mostly smaller lenders have switched over because the implementation process is more complex for large companies, the Journal reports.

There has been no word on if or when Experian will adopt the new model, as it is currently involved in a lawsuit with FICO.

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New FICO scoring model places even more emphasis on consumers carrying higher debt loads.