Fair Isaac Corp. is in the process of coming out with a different way to forsee consumers FICO credit scores as well as future default risks. Fair Isaac Corp. is the company that contructed the FICO credit score.
*The new design will predict how lenders can offer even more debt to consumers without taking on unnessary risks.
*The update revamps the old credit-scoring formula so that it penalizes consumers with a high debt load more than the earlier version. FICO 08 should increase predictive strength by 5 to 15 percent.
*This new design is expected to be better at determining if a person who has a past history of defaults and if they are going down a better path. It also addresses if these people should have higher scores.
*According to the company, this updated index can take a look at 3 people with a FICO of 700 and predict which of these individuals could take on an increase amount of debt without defaulting.