Oh snap, FICO is about to get more racist/classist

quote:

---

The changes will be extensive. About 40 million Americans are likely to see their credit scores drop by 20 points or more, and an equal number should go up by as much, according to Joanne Gaskin, vice president of scores and analytics at FICO, the company at the heart of the credit scoring system.

Every five years or so, FICO updates the way it determines credit scores. This time, the biggest change is in how it treats personal loans, Gaskin says.

---

quote:

---

Let's let's say you pay off all your credit cards with a personal loan. Under the old system, your credit score might go up. But under the new approach, FICO will look back over a period of time — as far as two years — to see whether you've used the loan to reduce your high-interest credit card debt or whether you're using plastic as much as before, running up new revolving balances and falling deeper into debt.

"What we find is that potentially that consumer's credit file carries more risk than what was apparent," Gaskin says.

---

quote:

---

If your finances are in good shape and you already have a good credit score, you're likely to see your score improve, she says. But Gaskin says those whose scores will decline are typically people in the lower FICO score range, about 580 and below. (FICO scores range from 300 to 850.)

That's not good news for people who are struggling financially, says Marisabel Torres with the Center for Responsible Lending. "It sounds like we're penalizing people for getting into a bad situation."

---