Equifax and FICO Make-Up and Decide to Play Nice: What it Means for Your Credit Score

Breaking news:
Equifax and Fair Isaac are back together. The new FICO score model that ignores authorized user accounts is on its way.

Background:
The credit bureau, Equifax, and credit score developer, Fair Isaac (FICO), had a close relationship in the past. Equifax is the one bureau that actively promotes FICO scores with their products. They're the only bureau to upsell customers a FICO score on AnnualCreditReport.com. That's why it was somewhat shocking when FICO went after Equifax starting in 2006 for their involvement in the development of the VantageScore. That sweetheart relationship went pretty sour.

The animosity between the two companies was a major factor in the delayed roll-out of the new FICO scoring formula announced in June 2007, called FICO 08. This is the new version of the FICO score that doesn't include authorized user accounts and sent the piggybacking industry into hysterics. These shady credit repair companies were more than relieved when the score was rolled-out slower than expected and sent out all sorts of press releases touting that their services were still valuable (only for a few more months and still not worth the money, but they don't mention that).

Earlier this month, we reported an update to the release of the FICO 08 score. Experian made the model commercially available in May 2008 and TransUnion is scheduled to start using it sometime this summer. At that time, Equifax had no ETA for implementing FICO 08.

What it means:
Today's announcement that Equifax and FICO have put the arguments behind them and started working together is significant. It means that FICO 08 is soon to come at Equifax and the days of authorized user accounts having any score impact are even more limited than they were before. Its possible that Equifax will start selling FICO 08 through AnnualCreditReport.com.

Consumers who are enjoying extra credit score points from an authorized user account - whether legitimate or paid for from a piggybacking service - may see a fairly dramatic drop in their credit score as the new FICO model starts being widely implemented with all three credit bureaus.

Questions about this Equifax and FICO news? Contact our team of credit experts at emilyblog@credit.com.

Emily Davidson – A former TransUnion insider and a member of Credit.com's expert team. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.

Comments

[Emily @ Taking Charge]

I think that's very good news. Piggybacking doesn't really seem fair -- if you need better credit, I think you should have to earn it, not ride on someone else's coattails. I'm glad that will now carry less weight.

[JohnUlzheimer]

Tell that to the wife of someone who chose not to open credit cards in her own name, got divorced and now can't get credit b/c she won't get any "credit" for helping to manage those credit cards as the authorized user. There's always another side to the story.