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Fair Isaac Corp has become a household name in the last few years as people are increasingly fixated on making sure that they’re credit worthy and as the usage of debt in the United States has increased on an exponential basis. Their proprietary mathematical formula is used every day to determine whether or not people get home loans, auto loans, credit cards, student loans, and the like. Fair Isaac is planning on some changes in their calculation methods which are said to be the most significant changes they’ve made since the 1980’s. Fair Isaac expects these changes to effect over 60 million consumers in the United States.

The first major change is that Fair Isaac is no longer going to consider someone who is an authorized user as a holder in the account. Many individuals have been attaching their names to their family member’s liabilities so that when the debt is paid on time, it improves their often sub-par credit. The Fair Isaac Corporation has decided to put an end to this practice. Their primary concern is that when individuals are piggybacking on other people’s debts to improve their credit score without doing anything that realistically shows that they are becoming more credit worthy.

The second additional change is that they are adding two additional population segments. Previously FICO grouped individuals into different groups of people, now there will be 12 groups. There will be 8 segments for those with good credit and 4 for those with bad credit. Depending on what group you’re in, your credit score will be calculated in a slightly different method. Your credit score could be adjusted upward or downward depending on what segment you fall in.

FICO won’t specifically mention what groups they’re adding our changing because they don’t want anyone to figure out their proprietary formula, but one can reasonably assume that it’s very likely that they’re going to be adding a population segment that involves people with thin credit. This segment of the population uses very little debt, does not have bad credit, but under the current model they have a very low credit score because a good credit score primarily means that you borrow a lot of money and pay it back consistently over time. FICO will most likely be calculating scores for this group of people now, where as previously they would either have a very low credit score, or just not have one at all.

If you plan on buying a home or another major purchase on credit in the next year, it will definitely be worth your money to order a new copy of your FICO score later in the year when the changes to the formulas are made. This way you won’t be blindsided if the changes do affect you when you are applying for a loan.



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