New FICO Score 9 will change the way many credit challenged consumers with a limited credit history are scored

Our Understanding

Limited Credit and FICO Score 09

Here at Auto Credit Express we understand the frustrations borrowers with limited history - often called "thin credit files" in the car business - face when applying for an auto loan. So we were pleasantly surprised when FICO released the particulars of its new scoring model that would seem to address this issue.

FICO Score 9

In the press release announcing the upcoming rollout of the new scoring model, FICO explained it this way:

FICO Score 9 also supports the desire of lenders to better assess the risk of consumers with limited credit history - so - called thin files. In the model development process, FICO data scientists represented a consumer's repayment behavior in degrees of risk. For example, instead of classifying a consumer as someone who paid or didn't pay her bills in absolute terms, the various degrees of the consumer's payment history have been quantified. The end result is a score with an improved ability to assess the risk of thin files.

"FICO Score 9 uses a more refined treatment of consumers with a limited credit history and those with accounts at collection agencies, so that lenders can grow their credit and loan portfolios more confidently," said Jim Wehmann, executive vice president for Scores at FICO.

The Good News for Bad Credit Borrowers

The good news for consumers with credit issues is that the new FICO score will no longer penalize borrowers equally for 30, 60, 90 and 120 day late payments and will adjust the penalty accordingly. In other words, a 30-day late payment will have less of an impact on a credit score than a 60-, 90-, or 120-day late payment.

So buyers with shorter late payments should see their credit scores rise, while the process also introduces a way to better estimate the ability to pay for those borrowers with very little information in their credit files. This improvement, by the way, is especially important to consumers with poor credit and could affect their ability to qualify for a poor credit auto loan.

The Bottom Line

By being able to better judge applicants with past due issues and insufficient information in their credit reports, FICO is taking steps to insure that these consumers will get a better opportunity to obtain credit - a situation that's particularly relevant to car buyers with poor credit.

Something else that's important: Auto Credit Express has helped thousands of people with less than perfect credit get financed through a nationwide network of dealers that specialize in bad credit and helping buyers reestablish themselves.

So if you are serious about getting your credit back on track, you can begin the process now by filling out our rel="nofollow">secure online car loan application.