How The New FICO Score Will Affect Credit Card Applicants

How is your credit? Some people have great credit, others have bad, and some have nonexistent, which can sometimes be worse than having bad credit.

Now there is a change in the new FICO credit score that may be able to help with those bad or nonexistent scores in obtaining new financing, loans, credit cards and improving their ability to borrow money in the future.

Introducing FICO 9

This fall, Fair Issac is presenting its new scoring model, FICO 9. This new model is to help make it easier for millions of Americans to get loans. It will likely be adopted by credit card and auto lenders first. This new version of FICO will also increase the scores of individuals with medical debts. FICO 9 will now disregard any collections that have already been paid.

This new system could be helpful for those who have little or no credit by using nontraditional ways of looking at someone’s credit history, such as looking at a person’s bills and seeing how their track record holds up.


The new model does seem to have some positive buzz about it.

• Individuals with a median score could see a small rise in their FICO score. This could save thousands of dollars in loans.
• Consumers whose credit scores are tarnished by unpaid debts that went to collection agencies-but were ultimately settle or pay them-are likely to see a much greater rise in their scores.
• The revisions will result in improved credit scores and better chances for home shoppers to qualify for mortgages and lower rates.
• The biggest impacts are: Credit scores assigned to consumers with little or no credit history. Removal of closed or settled collection accounts from the formula. AND reduced emphasis on medical debts.

Cons of FICO 9

The new scoring method seems like a good thing but some say there are some downfalls.

• It loosens standards without overstating the creditworthiness of borrowers.
• Mortgages are likely to lag since the FICO scores that most lenders use are two versions old.
• Credit card and personal loans may be harder to get for people with unpaid debts that aren’t related to health care.
• The changes in the new system will not happen right away. While the score is expected to be available to lenders later this year, they tend to take months to try out the formula for their loans.

The Potential Outcome

So what does all this mean? FICO 9 will result in some reduction scores of people but it’s not a major change. And those who use credit cards less or who lack credit history will no longer be penalized.