SAN DIEGO, CA. – What do the new credit scoring models, recently announced by the three major credit reporting agencies (CRAs) mean for consumers in 2006
 
"Not much." was the answer from many industry observers and experts to hundreds of questions ICFE has received from financial counselors, especially military counselors. Here is a typical inquiry received at the ICFE.

Question: "I just read that Experian, Equifax, and TransUnion merged their credit scoring procedures changing the numbers from 350/800 to 501/990. How is this going to affect the FICO scoring system and credit reporting in general?" from Angel Dominguez, a USAF Career Readiness Consultant, in Enid, OK.

ICFE asked Craig Watts, the public affairs manager at FairIsaac, about the changes. Here is his reply.

"The credit bureaus' newest risk score raises some interesting questions, but as is always the case in this industry it will be a long time (at least six months, more likely several years) before anyone knows if the score is going to be a successful competitor to scores such as the FICO score that already are entrenched in lenders' decision systems.

Until the government sponsored enterprises (GSEs) weigh in on this new score - IF they decide to do so - the mortgage industry and secondary market will continue to focus on FICO scores. The best known GSEs are Fannie Mae and Freddie Mac. Six years after the FICO score was introduced, both GSEs finished their testing of the score and advised mortgage lenders to begin using automated credit scores - they referred to FICO scores and a competing score -- in their loan underwriting.

So this announcement is a non-starter for consumers and will stay that way until the bureaus can demonstrate that a large percentage of big lenders have begun using this new score to make consumer credit decisions. When Experian rolls out this new score for consumers in a couple of months, it will have the same value to consumers that Experian's PLUS score has today - zero. That's because the value to consumers from knowing a score arises from the targeted lender also using that same scoring system.
You may quote me if you like, I ask only that you provide enough context so my comment(s) aren't misleading. Craig Watts Public Affairs Manager Fair Isaac Corporation 200 Smith Ranch Road San Rafael, CA 94903-1996 Phone: 415-492-5399 craigwatts@fairisaac.com.