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History of Credit Scores

History of Credit Scores: Brief Synopsis

  • The first generic FICO scoring model was created by Fair Isaac and Equifax in 1989.
  • A new version of the FICO score model is released every few years.

History of Credit Scores: Full Explanation

In 1956 Bill Fair and Earl Isaac founded a company called Fair Isaac. Fair Isaac changed its name to FICO in 2009. The main purpose of the Fair Isaac Company was to determine who was a good credit risk for car loans. Over the years, the FICO score has evolved into a determining factor of who is a good credit risk for cars, homes, credit cards, personal loans, employment, etc.

In 1989 Equifax and Fair Isaac created the first generic scoring model. Prior to this all models were custom design just for the use by the company that wanted a scoring model. The generic version was the first to be used by vastly different types of companies. This is truly the “birth” of the generic FICO model used today and an important chapter in the history of credit scores.

It was not until 1995, when Fannie Mae and Freddie Mac recommended the use of FICO scores for evaluating US mortgage loans, that FICO gained national recognition. Since that time, FICO has dominated the credit scoring market. In fact no mortgage lender in the country uses a score other than the FICO score to determine mortgage eligibility (talk about a monopoly).

Every few years FICO revises their FICO algorithm and releases a new FICO Score model, each one touted as an improvement over its predecessors. The latest version of FICO is called version 5.  Version 5 became live at Equifax on Oct. 9, 2014, at Trans Union on Nov 19, 2014, and at Experian on Feb 19, 2015.  Two big changes in this version are rent data will be incorporated at Trans Union and Experian and all zero balance 3rd party collection accounts will be bypassed by the score model.





Version 1 1995

Not in Common Use

Not in Common Use

Not in Common Use

Version 2 1998

FICO Risk Score Classic 98

(aka Empirica Score) TU-98

EXP FICO Score 2

(aka EXP FICO Risk Model v2)

EQF FICO Score 4

(aka EQF Beacon 96)

Version 3 2004

TU FICO Risk Score Classic 04

(aka Empirica 2004)or TU-04

EXP FICO Score 3

(aka EXP FICO Risk Model v3)

EQF FICO Score 5

(aka EQF Beacon 5.0) or EQ-04

Version 4 2008/2009

TU FICO Score 8 (aka TU FICO 8 Risk Score or FICO Risk Score Classic 08)

EXP FICO Score 8

(aka EXP FICO Risk Model v8)

EQF FICO Score 8

(aka EQF Beacon 09) or EQ-08

Version 5 2014/2015

TU FICO Score 9

Live 11/19/2014

EXP FICO Score 9
Live 02/19/2015

EQF FICO Score 9
Live 10/09/2014

TU rebranded their Empirica brand and renamed their score the TU FICO Score

EQF rebranded their Beacon score when FICO 9 became available renaming their old versions to EQF FICO Score

Confusing huh? Wait until you read my next section about “FAKO” scores! I hope you enjoyed this bit of credit help and credit history.

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