Saturday, May 19

Subprime behavior catches attention of Fair Isaac

In order to better predict the behavior of subprime borrowers, Fair Isaac announced on Thursday that they will change the way they tabulate its FICO credit score.

Fair Isaac will launch an upgraded version of the system in September which aims to bolster the accuracy of scores by 5 to 15 percent.

The FICO scoring system is used by the three major U.S. credit reporting agencies; Fair Isaac said it periodically refreshes its formula.

Credit scores have taken on new importance lately, as a rise in subprime mortgage delinquencies and foreclosures makes lenders want to know which borrowers are the best risks..
The new FICO score will use the same 300 to 850 scoring range, but will be able to better assess new accounts and borrowers who have little or no credit histories, such as young people.