New FICO Credit Scores Will Affect Millions of Americans
Why is FICO making these changes?
One reason is that credit scores for U.S. consumers have been creeping up since 2009, reaching an average[3] of 706. The higher scores reflect some combination of improved creditworthiness as the economy has strengthened, changes to FICO’s scoring over the past several years, and the effects of a settlement[4] between several states and the nation’s three biggest credit reporting companies, TransUnion, Equifax, and Experian. As a result of that settlement, the credit reporting companies expunged negative credit items from millions of Americans’ reports. FICO is adamant that the improving scores reflect improving creditworthiness, not artificial score inflation, but at least some lenders are not so sure. They’re also concerned about what will happen if the economy weakens.