[T]he new FICO Score 9 was just released, and promises good things for the average person. While this updated model has been talked about for some time, it was finally made public in an announcement by FICO and will be available for lenders and creditors.
Changes
The main changes in this model are in regards to collections, often an area of discouragement for those trying to improve or rebuild their credit from past issues. Medical collections will no longer be treated the same as other collection accounts.
The second big change is in regards to paid collections. In the past, they were treated the same as unpaid collections. Now, they will be left out of the scoring model. This means that if you have paid a collections account, it will not be figured in your score. People with these accounts on their credit report should see scores rise with this new model.
Don’t Get Too Excited
Before you rush out and try for a car loan or mortgage, realize that although this model is now available, not all lenders will be using it. Many lenders will try out the new model on a few applicants to see if it works before they revamp their entire system. There are no rules requiring them to adopt it, which means they can continue to use the old model.
The lenders most likely to implement the new scoring model are the bigger companies. The change to a new scoring model is a big undertaking for systems and can be time-consuming and costly. Smaller banks and creditors are more likely to stick with what they have for now.
Because you never know what model a lender is using, you must continue to work on improving your credit score with good behavior. It will take at least a year for the new score to be seen in banks and other institutions even if they do adopt the model.
The one benefit for customers with the new model is that improving a poor credit score is now made possible through their decisions. It also encourages them to pay off debts even if they are old.
