FICO 08

DEFINITION of 'FICO 08'

A credit-scoring model introduced in 2009 by the FICO company to provide a more accurate picture of a potential borrower's ability to repay a loan. In particular, it is meant to provide a more accurate assessment of low-risk consumers whose scores were blemished by minor delinquencies, consumers with minimal credit history and consumers with poor credit.

BREAKING DOWN 'FICO 08'

The new formula ignores minor slipups, such as delinquencies with an original amount of $100 or less. It also weeds out people who had been inflating their credit scores by paying a stranger with better credit to add them as an authorized user on one of their credit card accounts (a practice known as "piggybacking"). The range of possible credit scores remains unchanged under the new system.

RELATED TERMS
  1. Delinquent Account

    A credit card balance on which a consumer has failed to make ...
  2. Good Credit

    A qualification of an individual's credit history that indicates ...
  3. Credit Score

    A statistically derived numeric expression of a person's creditworthiness ...
  4. Credit Utilization Ratio

    An input used in determining a person's credit score. It is the ...
  5. Adverse Credit History

    A track record of poor repayment history on one or more loans ...
  6. Bad Credit

    A qualification of an individual's credit history that indicates ...
Related Articles
  1. Credit & Loans

    Top Places To Get A Free Credit Score Or Report

    When's the last time you checked your credit report? With all the hacking out there, don't wait for the car dealer to find problems when you need a loan.
  2. Credit & Loans

    What Do Credit Score Ranges Mean?

    Take a closer look at what credit scores in each range mean for your financial future.
  3. Credit & Loans

    How FICO Scores Are Calculated

    Lenders look at this to determine your credit risk. We explain what it is and how it's figured out.
  4. Credit & Loans

    What Is The New 'FICO Score 9' And Its Benefits?

    A change in how some credit scores are calculated might soon make it easier for some homebuyers and homeowners to get a mortgage.
  5. Personal Finance

    What Credit Score Should You Have?

    We break down credit scores by age to see what your score should be and how it will affect your major purchases.
  6. Credit & Loans

    Getting Your Credit Score from a Bank

    That all-important, once-secret number is now easy to obtain from financial institutions and credit card companies.
  7. Credit & Loans

    FICO Credit Score Changes – Will Yours Go Up?

    Your FICO score could rise due to a new way of scoring some debts – which could make you eligible for a lower interest rate on credit cards or loans.
  8. Credit & Loans

    Can You Hit The Highest Credit Score?

    Yes – it's doable. But the real question is, does it matter?
  9. Credit & Loans

    What Lenders Look at on Your Credit Report

    What do lenders consider when they look at your credit report? It’s a simple question with a complicated answer.
  10. Credit & Loans

    9 Ways To Improve Your Credit Score Today

    When it comes to finances, there are a number of goals that you might have established, such as saving money, paying down debt or new investments.
RELATED FAQS
  1. How does the number of credit card accounts I have affect my credit score?

    Your credit score, which is also referred to as your FICO score, is a measure that creditors use to assess your potential ... Read Answer >>
  2. What's the difference between credit score and credit history?

    Check out the differences between credit score and credit history, and learn how your credit history is used to create your ... Read Answer >>
  3. What are the biggest factors that can affect my credit score?

    A credit score is a numeric expression that helps lenders estimate the risk of extending credit or loaning money to people. ... Read Answer >>
  4. What is the highest achievable FICO score?

    Your FICO score is used by creditors to determine the overall credit risk of any individual consumer. This score is calculated ... Read Answer >>
  5. Why don't I have a credit score?

    Learn about some of the reasons why you might not have a credit score, and find out how you can build a good credit score ... Read Answer >>
  6. What is the difference between bad credit and no credit?

    The answer to this question will depend on what information (if any) is found on your credit report, such as any bankruptcy ... Read Answer >>
Hot Definitions
  1. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  2. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  3. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  4. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  5. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
Trading Center