Local financial analysts downplay the impact of new FICO credit scores

Jan 30, 2020, 11:56 PM | Updated: Jan 31, 2020, 5:13 am

SALT LAKE CITY – Recent news about changes to the way FICO determines credit scores caused a big shakeup in the financial world.  However, local analysts say the impact of these new FICO credit scores won’t be nearly as big as some news outlets have said… IF there’s any impact at all.

A week ago, Fair Isaac Corp., of FICO, announced the changes they’re making to their scoring model.  According to CNN, the new system would take a closer look at a consumer’s personal loans and would take their debt levels into account.

This isn’t the first time FICO has changed their formula.  Mortgage analyst Al Bingham says they do that every few years.

“The purpose is to help identify risk in a better percentage than the current model,” he says.

Officials with FICO issued a statement saying 80 million people would see some sort of shift to their score by at least 20 points.  Half of those people would see their score go up, while the other half would see it fall.

Bingham is pushing back on that claim.  He doesn’t believe anything will change at all, adding that the new system would only impact consumers if the major lending companies decided to adopt them.  According to Bingham, no one really is.

“[Lenders] have used the same credit scoring model for the last 24 years,” he says.  “We can create all kinds of widgets, but if the widget is not sold for a profit in the public, there’s no value to it.”

Also, he says big banks have a lot of their debt tied to older scoring models, and they have a very good reason not to switch over.

“If these major investors were to change credit score models, it would cost them billions of dollars.  Billions.”

Bingham says neither Fannie Mae, Freddie Mac nor the Federal Housing Administration have made any announcements that they’re switching to a new model.

Today’s Top Stories

All News

For the first time in history, a woman has taken to the field as a referee during World Cup soccer....
Associated Press

Stéphanie Frappart makes history as 1st female World Cup ref

Frappart also had two women as assistants. Neuza Back of Brazil and Karen Diaz Medina of Mexico complete an all-female refereeing team on the field.
16 hours ago
Hari Bastakoti shovels a sidewalk following a snowstorm in Salt Lake City on Tuesday, Nov. 29, 2022...
Samantha Herrera

Storm bringing wind and snow to northern Utah

A storm is bringing winds of up to 55 mph Thursday and possibly three to four inches of snow on Friday along the Wasatch Front.
16 hours ago
The inventor of the Rubik's Cube offers advice for solving it, and says 'don't fear the complexity...
MARK KENNEDY AP Entertainment Writer

The mind behind the Rubik’s Cube celebrates a lasting puzzle

Ernő Rubik invented the cube in 1974. Since then, the puzzle has become a worldwide phenomenon with over 450 million cubes sold.
16 hours ago
An 18-year-old man has turned himself into police in connection with a shooting in Orem at the Axis...
Allie Litzinger and Samantha Herrera

18-year-old connected to Orem shooting turns himself in

The man is accused of attempted murder after a shooting in Orem in November. He turned himself in with the help of his lawyer.
16 hours ago
lindsay lohan is pictured in a Santa outfit pouring milk into a glass of pepsi...
Danielle Wiener-Bronner, CNN Business

Pepsi wants you to drink soda mixed with milk this holiday season

To make the campaign even trendier, Pepsi tapped Lindsay Lohan, star of the Netflix Christmas movie "Falling for Christmas," to promote the combination.
16 hours ago
USU Eastern Student Wins Bronze Medal in Welding Competition...
Aubri Wuthrich

USU Eastern student takes 3rd in global welding competition

The USU Eastern welding student scored seven points behind the gold medal winner and took the Best of Nation Award.
16 hours ago

Sponsored Articles

Spicy Homemade Loaded Taters Tots...

5 game day snacks for the whole family (with recipes!)

Try these game day snacks to make watching football at home with your family feel like a special occasion. 
Happy joyful smiling casual satisfied woman learning and communicates in sign language online using...

The best tools for Deaf and hard-of-hearing workplace success

Here are some of the best resources to make your workplace work better for Deaf and hard-of-hearing employees.
Team supporters celebrating at a tailgate party...

8 Delicious Tailgate Foods That Require Zero Prep Work

In a hurry? These 8 tailgate foods take zero prep work, so you can fuel up and get back to what matters most: getting hyped for your favorite
christmas decorations candles in glass jars with fir on a old wooden table...
Western Nut Company

12 Mason Jar Gift Ideas for the 12 Days of Christmas [with recipes!]

There are so many clever mason jar gift ideas to give something thoughtful to your neighbors or friends. Read our 12 ideas to make your own!
wide shot of Bear Lake with a person on a stand up paddle board...

Pack your bags! Extended stays at Bear Lake await you

Work from here! Read our tips to prepare for your extended stay, whether at Bear Lake or somewhere else nearby.
young boy with hearing aid...

Accommodations for students who are deaf and hard of hearing

These different types of accommodations for students who are deaf and hard of hearing can help them succeed in school.
Local financial analysts downplay the impact of new FICO credit scores