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.

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

All News

FILE - A skier turns through the trees at Powder Mountain. (Jeffrey D. Allred/Deseret News)...

Mariah Maynes

Strong winds cause ski lift holds, Powder Mountain cancels day skiing March 2

Powder Mountain announced that day skiing will be closed tomorrow following strong winds. The announcement came as resorts across the state experienced impacted lift operations due to the gusts. 

6 hours ago

(Utah State Capitol.  Photo: Paul Nelson)...

Mariah Maynes

Gov. Cox not planning to veto any 2024 legislative session bills

As the 2024 Utah legislative session draws to a close, Gov. Cox said he is not planning to veto any bills. 

7 hours ago

Republican presidential candidate former UN Ambassador Nikki Haley speaks at a Republican campaign ...

WILL WEISSERT Associated Press

Haley says she raised $12M in February, can’t point to long-term plan to beat Trump

Republican presidential candidate Nikki Haley said Friday that she raised $12 million in February, a haul that will likely allow her to remain in the Republican primary against former President Donald Trump past next week's Super Tuesday — even though she can't point to an upcoming state where she expects to beat him.

8 hours ago

Former Marjory Stoneman Douglas High School Scot Peterson shown, a school arming school staff is aw...

Curt Gresseth

Lawmaker talks about arming school workers, despite studies saying guards don’t prevent gun violence

Arming school workers will lead to safer schools, says a Utah lawmaker whose bill awaits the governor's pen to become law.

10 hours ago

Chief of Police for Price City Police Department, Brandon Sicilie, holding PeeDee....

Britt Johnson

Abandoned puppy finds a home at the Price Police Department

PeeDee, a puppy found on the side of a roadway during a dispatch call, has found a new home with the Price City Police Department.

12 hours ago

great salt lake shown, a bill to preserve the lake has passed...

Adam Small

Utah Legislature passes massive bill aimed at helping Great Salt Lake

This bill subjects mineral extraction companies to the same rules as every other water user in Great Salt Lake Basin.

13 hours ago

Sponsored Articles

Mother and cute toddler child in a little fancy wooden cottage, reading a book, drinking tea and en...

Visit Bear Lake

How to find the best winter lodging in Bear Lake, Utah

Winter lodging in Bear Lake can be more limited than in the summer, but with some careful planning you can easily book your next winter trip.

Happy family in winter clothing at the ski resort, winter time, watching at mountains in front of t...

Visit Bear Lake

Ski more for less: Affordable ski resorts near Bear Lake, Utah

Plan your perfect ski getaway in Bear Lake this winter, with pristine slopes, affordable tickets, and breathtaking scenery.

front of the Butch Cassidy museum with a man in a cowboy hat standing in the doorway...

Bear Lake Convention and Visitors Bureau

Looking Back: The History of Bear Lake

The history of Bear Lake is full of fascinating stories. At over 250,000 years old, the lake has seen generations of people visit its shores.

silhouette of a family looking over a lake with a bird in the top corner flying...

Bear Lake Convention and Visitors Bureau

8 Fun Activities To Do in Bear Lake Without Getting in the Water

Bear Lake offers plenty of activities for the whole family to enjoy without having to get in the water. Catch 8 of our favorite activities.

Wellsville Mountains in the spring with a pond in the foreground...

Wasatch Property Management

Advantages of Renting Over Owning a Home

Renting allows you to enjoy luxury amenities and low maintenance without the long-term commitment and responsibilities of owning a home.

Clouds over a red rock vista in Hurricane, Utah...

Wasatch Property Management

Why Southern Utah is a Retirement Paradise

Retirement in southern Utah offers plenty of cultural and recreational opportunities. Find out all that this region has to offer.

Local financial analysts downplay the impact of new FICO credit scores