Many consumers are aware that they have a FICO score, a scoring model used by most banks and lenders to rate their use of credit and debt issued that’s been issued by the Fair Isaac Corp. since 1989. But far too few realize there are different versions of FICO scores, and not all banks and lenders use the latest versions, and in fact, most till use FICO 4 which is almost ancient considering that FICO 9 has now been rolled out, despite the fact that lenders haven’t even fully adopted FICO 8, which was supposed to be implemented in 2008, but it really doesn’t matter because FICO 8 isn’t even useful for people trying to get a mortgage.

Are you thoroughly confused yet? It’s for good reason, as the many in the industry can’t even keep tabs on FICO’s unpopular mad scientist experiment, FICO 8. But here are some things we do know for certain about FICO 8:

-FICO 8 was set to be released in 2008, but was delayed until 2009 due to several lawsuits and other complications.

-Officially called the FICO 8 Bankcard Score, it was specifically meant to measure a consumer’s risk based on their track record with credit cards.

-FICO credit scores range from 300 to 850 but FICO 8 Bankcard Scores range from 250 to 900.

-Believe it or not, FICO also has “specialty” scores that intend to more accurately rate a consumer for when they try to get an auto loan, a mortgage, or other kinds of debt.

-Before FICO 8, the traditional and widely accepted scoring model was FICO 4, which was most common with banks and lenders, including mortgage lenders.

-Here’s where it gets even more puzzling: even though FICO released FICO 8, it doesn’t (nor can it) mandate that lenders use that latest version. For years, FICO pushed, encouraged and cajoled its clients (the banks and lenders) to adopt FICO 8, but with little traction.

-There could be several reasons why FICO 8 wasn’t widely implemented in the industry, but most experts believe that banks and other lending institutions are just so big, slow moving, and have their hands full with other business that it takes a long time and there needs to be a clear, resounding benefit for them to make the switch.

-And just recently, FICO 9 was introduced, which recalibrates an accurate score by deemphasizing consumer snags with medical debt and collections, a common reason for scores to drop but not necessarily an accurate indicator of future responsible use of credit cards, mortgage, and other debt.

-Even now, the only scoring model that consumers can purchase and check is based on FICO 4.

-And while FICO 9 is available at myfico.com and used by a handful of auto lenders and credit card issuers, it also lags far behind FICO 4 in popular use.

-FICO 8 adds more weight to a consumer’s use of credit cards. So maxed out cards, high balances, and missed credit card payments will result in a score drop much more significant than with FICO 4 or other scoring models.

-If a 30-day late payment appears but is an isolated incident (the consumer isn’t late often or on other accounts) then the scoring hit won’t be as large.

-Interestingly, FCO 8 intends to discourage the practice of consumers becoming authorized users on someone else’s card for the sole purpose of boosting their credit score. Sometimes called “tradeline renting,” FICO 8 gives almost no credence to authorized user accounts in good standing (but doesn’t ding you for them, either).

-Delinquencies on small balances, like $100 or less, are almost inconsequential to FICO 8. Many consumer delinquencies under $100 are old cable bills, utility collections, cell phone carriers, and medical charges – all items FICO doesn’t want to weight too heavily when calculating scores.

So with all of these FICO scores, changes, and new evolutions of scoring models swirling around, what’s a consumer to do? That part is easy, as the same fundamental use of credit and debt applies to maintain a good score; pay your bills on time, don’t overuse your credit, watch how many and what kind of tradelines you open, and periodically monitor your report for errors, fraud, or identity theft. Finally, a nugget of FICO advice that makes perfect sense!

As always, contact Blue Water Credit if you have any questions about your credit score or report or would like a free consultation on ways to improve your score.

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Even FICO attempts to warn you that all credit scores aren’t created equal. Below is the disclosure the appears at the end of the report regarding the 8 version:

“FICO Scores are developed by Fair Isaac Corporation. The FICO Score provided by Experian is based on the FICO 8 scoring model and is powered by Experian credit data. Many but not all lenders use the FICO 8 scoring model.

There are many different credit scoring models that can give a different assessment of the credit risk (risk of default) for the same consumer and credit file. Your lender or insurer may use a different FICO Score than FICO 8, or another type of credit score altogether. Just remember that your associated risk level is often the same even if the number is not. For some consumers, however, the risk assessment of FICO 8 could vary from the score used by your lender. The statements that “90% of top lenders use FICO Scores” and “FICO Scores are used in 90% of credit decisions” are based on a third-party study of all versions of FICO Scores sold to lenders, including but not limited to scores based on the FICO 8 scoring model.

FICO 8 scores range from 300 to 850. Higher scores represent a greater likelihood that you’ll pay back your debts so you are viewed as being a lower credit risk to lenders. A lower FICO Score indicates to lenders that you may be a higher credit risk. There are three different major credit reporting agencies—Experian, TransUnion and Equifax—that maintain a record of your credit history known as your credit file. Your FICO Score is based on the information in your credit file at the time it is requested. Your credit file information can vary from agency to agency because some lenders report your credit history to only one or two of the agencies. So your FICO Score can vary if the information they have on file for you is different. Since the information in your file can change over time, your FICO Score may also change.”