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Credit Score Formula Changes

Credit-Scores Fair Isaac makes $200 million a year selling credit score formulas.  Now it’s trying to make those scores better.

In Canada we commonly refer to FICO (Fair Isaac Corporation) scores as “Beacon scores.”  Beacon scores range from 300 to 900 with an average near 720.

Here’s the thing.  People with bad credit often try to boost their scores by becoming an authorized user on a more credit-worthy person’s credit card.  It’s called “piggybacking.”  In fact, Fair Isaac says up to 30% of consumers have at least one other person authorized on a credit account.  (Not all authorized users have bad credit).

Fair Isaac says piggybacking will soon be a no-no.  In other words, no longer will adding yourself to someone else’s credit card improve your score.  Fair Isaac is making this change to its algorithms in September but it’s still unclear when this change will take effect in Canada.  (Editors Note:  Once we find out we’ll post it.)

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Last modified: April 25, 2014

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