Home / Credit Scores Have Gotten a Makeover
Credit Scores Have Gotten a Makeover
FICO released three new methods to score credit reports. The following scores will now be available to borrowers looking to purchase different commodities.
The FICO Mortgage Score
The FICO Mortgage Score is similar to the current version of the FICO score used by Equifax, called BEACON. The new FICO Mortgage Score was developed due to the need for mortgage lenders to have a more accurate way to assess risk for potential mortgage borrowers. The score looks at specific credit risks that correlate to mortgage borrowing and repayments, rather than just an overall credit rating based on all the credit accounts a consumer has held.
This score is also known as an “Industry Option” score, meaning the standard FICO score is used as a basis and then a variety of other factors are then taken into consideration to determine the creditworthiness for a specific kind of loan. In this case, it is used strictly for mortgage loans.
If a borrower had a FICO score from Equifax of 750, which is a bit on the low side, but previous mortgages have been paid on time and in full, the mortgage portion of the score will actually raise the scoring used for a new mortgage. The reasoning is that regardless of an overall credit rating, someone with a history of timely mortgage payments is going to be much less of a risk to a lender than someone with a better rating, but poor mortgage payment history.
The FICO Auto Score
The variations of FICO scores do not stop there. Similarly, FICO is releasing a score that will be available to assess risk for auto loans and lenders as well. The credit reporting agency TransUnion will provide the FICO Auto Score, another “Industry Option” score, for borrowers looking to buy a new or used car, or are looking to refinance their current car loan.
The new auto score is expected to be far more accurate to assess the level of risk, and hopefully cut down on future delinquent payments. According to FICO auto lenders could cut down their potential losses by 5 to 15% using the new assessment tool available to them.
In a risky economic environment, being able to predict losses is extremely necessary. The FICO Auto Score should allow more loans to be made with confidence in a stagnant automobile market. It should also mean that lenders who have health balance sheets to take a bit more risk, since they will be able to more accurately tell which loans are likely to default, and by how much.
The FICO Bankcard Score
The new scores outlined above are also the models for the most recent version of the “Industry Option” score, specifically, the FICO Bankcard Score. This score will be utilized by companies that issue credit cards, such as stores, banks, and even investment houses that offer retail banking services. Again, a score similar to the TransUnion score will be the basis for the FICO Bankcard score, and then a review of a consumer’s past credit card habits will contribute to the raising or lowering of points.
Credit card issuers will most likely use this new score in their rating system for determining whether or not to extend credit and in what amount to applicants. Because of the popularity of credit cards, many being issued by a consumer’s favorite store, the need for accurate credit rating is needed. It is predicted that the FICO Bankcard score will be among the most used credit score in the future.
Similar to the FICO Mortgage and Auto scores, the Bankcard score will identify the specific risk of extending credit card credit and in some cases, increase the accurate assessment of risk anywhere from 6 to 12%. A major credit card issuer may have up to 30 million credit cards in circulation, so the improvement in predicting loss will have a significant impact on the industry.






"We didn't want to go through the foreclosure process. We were so embarrassed that we were facing a foreclosure and knew that all our neighbors would find out. A couple down the street had a foreclosure and they posted a sign on the property. It was so embarrassing. But we knew that it was coming. My husband lost his job and we were really struggling to make ends meet. We didn't want to lose our home, but felt we had no choice. We were really ashamed of what happened to us. Then we talked to 1st Foreclosure Prevention and they made us feel so much better. They didn't make us feel ashamed and actually gave us the foreclosure help we needed. Thanks to them, we didn't have to go through the foreclosure process that would have pained the entire family."
"We were like most other folks, I guess. Facing the foreclosure process and losing our home because we were out of work and owed too much on the property. You always hear about this happening to other people but never think it would happen to you. We were just going along with everything, trying not to think about it, but then my husband got an idea to call 1st Foreclosure Prevention - a company he had heard about that could stop foreclosure from happening. I figured it was a scam of some sort, but after we both got their free foreclosure consultation and found out about their company, we were impressed. We weren't like most other folks, at that point. We had foreclosure help and were able to stop foreclosure from happening to us."
"I was so stressed out in trying to figure out how I was going to stop foreclosure from happening to me that I actually had to see a doctor for stress. I struggled hard to buy my condo and wanted to keep my home and save my home from foreclosure. But it was getting difficult because the mortgage amount kept going up. I had an adjustable rate mortgage and the rate kept rising. On top of that, I lost my job and got behind in payments. I thought that this was it, I was not going to be able to stop foreclosure. Then I found 1st Foreclosure Prevention. They were able to stop foreclosure from happening to me and allow me to keep my condo. I am now all caught up, have a new job and happier than ever thanks to them."
"I'm really glad that 1st Foreclosure Prevention was able to help me with my mortgage problems. I was already in the foreclosure process when I called them for a free foreclosure evaluation. They were really nice and explained a lot of things to me that I didn't know, including how to stop foreclosure. I didn't even know that I could do that! They were able to work out a deal with my bank so that I was able to keep my home and pay less on the mortgage. Now I am able to afford my home and even save a little money, thanks to this company. I can't say enough good things about them."
"I struggled so hard to buy my home for me and my children and thought I got a good deal on a loan. But then I found out that the loan amount was going to go up each month. I wasn't able to afford the new payments. I had gotten a new job after being laid off, but my new job didn't pay as much as the old one. I was really figuring that I was in trouble. I wanted to save my home from foreclosure, but didn't know how. I called 1st Foreclosure Prevention and they treated me with compassion and respect. They knew all about the law, too, and how to stop foreclosure. They gave me a totally free foreclosure evaluation and explained all my options to me. Because of them, I was able to save my home from foreclosure."
"We were struggling every month to try to pay our mortgage and kept falling further and further behind on everything else. The place was a mess because we didn't have the money to fix it up, but we didn't think we could sell it because of the state of disrepair. My wife and I were like hamsters on a wheel, just trying to get through each day to make payments on a house we grew to dislike. But we knew that foreclosure would destroy our credit, so we held on. Then we found out about 1st Foreclosure Prevention. They were able to give us foreclosure help and even helped us with the sale of our home. We got to walk away from that mess and have started a new life, without a foreclosure on our credit report."