FICO 8 is a credit scoring system released in 2009. Since then, only a few lenders have adopted it. The vast majority of lenders still rely on FICO 2, 4, and 5 scores, which are all part of a larger report that mortgage lenders can obtain called the residential mortgage credit report (RMCR).

This report contains credit reporting on an individual from all three major credit reporting agencies: Equifax Inc. (EFX), Experian PLC (EXPN), and TransUnion LLC (TRU). Mortgage lenders usually take the middle score from this report. For example, if your credit scores from the above agencies are 710, 690, and 610, then the lender typically makes its decision based on the 690 score.

The Major Changes to FICO 8

However, more lenders are likely to migrate to FICO 8, so it is important to understand the five reasons why it makes the score different:

  1. FICO 8 is more sensitive to highly used credit cards. Higher balances, even on frequently used and paid cards, may have more of a negative impact.
  2. FICO 8 is more lenient to isolated late payments, but frequent late payments are penalized more.
  3. FICO 8 is more careful with, and more sensitive to, authorized users on credit cards.
  4. Small-balance delinquencies of less than $100 are ignored.
  5. Consumers are divided into many more categorical profiles under FICO 8.