How the New FICO Score
Model Will Affect Banks
It remains to be seen how much Fair Isaac Corp.'s recent change to its credit score model to exclude paid and unpaid medical debt will affect banks, as some bankers say they already exclude medical debt if the consumer has a strong credit background otherwise. Barry Harvey, chief credit officer and executive vice president at the $12.8 billion-asset Trustmark Corp. in Jackson, Miss., says, "This change of how FICO is viewing unpaid medical bills really doesn't change the actual decisions that are being made by underwriters when it comes to evaluating consumer credit requests. However, for those institutions operating in an automated credit decisioning environment, the new score may result in more automatic approvals and less automatic declines due to the higher score." Additionally, bankers note that it will take at least a year to implement the new model, as it first must be adopted by the three main credit bureaus. Meanwhile, Fannie Mae and Freddie Mac continue to use a FICO scoring model that is two systems behind the new one, and banks generally follow their lead.
From "How the New FICO Score Model Will Affect Banks"
American Banker (08/14/14) Witkowski, Rachel
It remains to be seen how much Fair Isaac Corp.'s recent change to its credit score model to exclude paid and unpaid medical debt will affect banks, as some bankers say they already exclude medical debt if the consumer has a strong credit background otherwise. Barry Harvey, chief credit officer and executive vice president at the $12.8 billion-asset Trustmark Corp. in Jackson, Miss., says, "This change of how FICO is viewing unpaid medical bills really doesn't change the actual decisions that are being made by underwriters when it comes to evaluating consumer credit requests. However, for those institutions operating in an automated credit decisioning environment, the new score may result in more automatic approvals and less automatic declines due to the higher score." Additionally, bankers note that it will take at least a year to implement the new model, as it first must be adopted by the three main credit bureaus. Meanwhile, Fannie Mae and Freddie Mac continue to use a FICO scoring model that is two systems behind the new one, and banks generally follow their lead.
From "How the New FICO Score Model Will Affect Banks"
American Banker (08/14/14) Witkowski, Rachel
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