FICO: The fifth generation

New credit-score method forgiving

Excerpt:

Fair Isaacs Co. of Minneapolis, the company that devised the complex algorithm that computes the credit score used by 90 percent of the nation's top 100 banks, has tweaked it so that bad credit risks will be more broadly separated from the good ones.

The fifth generation of the formula comes at a critical time as lenders more closely scrutinize customers for creditworthiness following the collapse of the subprime mortgage sector.

"It predicts the likelihood a person will become 90 days late or more — seriously delinquent — on any credit obligation in the next two years," said Craig Watts, spokesman for Fair Isaacs.

The credit score has become as common as the penny. Everyone has one, and many haven't a clue what to do with it.

Visa USA recently found that two of every five consumers hasn't ever checked their credit score and have no idea if it's good or bad. And just one in five checked it at all last year.

Comment: Sad to think that ignorance of one's FICO score (in the story ... not the excerpt) could cost one $ 100 per month for 30 years!)