Updated: Nov 25, 2019
"FICO Score 9 is already being used by hundreds of lenders and it's on the radar of 8 of the nation's top 10 lenders" --Tommy Lee, Principal Scientist at FICO
The two biggest providers of credit scores are FICO and VantageScore. FICO is the most commonly used score in the U.S. An estimated 90% lenders us FICO. There are many FICO score models that provide different scores. Each creditor uses one the FICO score models when checking for your credit score. FICO Score 9 is the latest score model to be released.
Your credit score is calculated using the data that is reporting on your credit report. The score ranges from 350-850 and is used to determine your risk as a consumer and sometimes for employment purposes. Although your score may be high enough for approval, different factors reporting on your credit report (collections, debt, etc) may result in a denial per the lender requirements.
2 Major Score Factors of FICO Score 9
Medical Collections and 3rd Party COllections
The Wall Street Journal wrote an article stating that 64.3 million Americans have medical collections reporting on their credit reports. For consumers dealing with medical collections FICO Score 9 would provide a higher score than other FICO score models.
In the FICO Score 9 model medical collections have less of an impact on the score. Also if paid to a zero balance, any 3rd party collection will not be calculated in the score but will still report on your credit file. Paying off collections in other FICO score models will not help the credit score. Keep in mind that collection agencies are not required to remove a collection even if paid, although some do. You still will have to wait 7 years. Credit Repair is a way consumers have removed collections paid and unpaid from their credit file much sooner.
For those of you who have been waiting to have your rental payments reporting, FICO Score 9 does just that. Other score models , accept VantageScore 3.0, did not calculate rental payments in your score even if reported. For consumers who pay their rent on time this can have a positive effect on their score.
FICO Score 9 has been out since 2016 and many companies are looking into using the score in years to come. As of now only a very small portion of lenders are using FICO Score 9. As FICO Score 9 become more popular we will see how this change will effect the credit industry.