Is FICO 8 or FICO 9 Credit Score Better? A Detailed Comparison

Your FICO credit score plays a huge role in determining your access to credit and finances. With FICO regularly releasing updated versions of their scoring model, an important question is – which FICO score is better and will benefit you more – FICO 8 or FICO 9?

In this comprehensive guide we’ll dive into the key differences between FICO 8 and FICO 9 analyze their advantages and disadvantages, and help you understand which scoring model works better for your credit profile.

First, let’s quickly understand what FICO scores are. FICO or Fair Isaac Corporation provides the most widely used credit scores by lenders in the United States.

FICO uses advanced algorithms and mathematical models to analyze information from your credit reports. This results in a three-digit FICO credit score ranging from 300 to 850, with a higher score indicating better creditworthiness.

Over 90% of lending decisions for credit cards, personal loans, mortgages etc. rely on FICO scores. Hence, having a good FICO score is absolutely essential for your financial health.

The Evolution of FICO Scores

The first FICO score was introduced in 1989. Since then, FICO has regularly updated its scoring models by incorporating new variables and data-driven insights. Some key versions include:

• FICO 92: The first FICO score launched in 1989.

• FICO 8: Launched in 2009. The most commonly used version today.

• FICO 9: The latest version released in 2014. Slowly gaining adoption.

While the core algorithm remains similar, each new FICO version aims to increase predictive accuracy. Lenders may use different versions based on their preferences.

Now let’s analyze FICO 8 and FICO 9 in depth.

FICO 8 Score

FICO 8 was released in 2009 and is currently the most widely used credit score model. It introduced several changes from previous versions:

Key Features of FICO 8:

• Weighs recent credit history more than older history.

• Reduced impact of small balances and isolated late payments.

• Divides consumers into more risk categories for increased granularity.

• Treats authorized users differently to reduce tradeline abuse.

• Ignores small collection amounts under $100.

Overall, FICO 8 provided more flexibility to consumers compared to older versions. Minor slip-ups or changes had a lower impact on scores.

FICO 9 Score

Introduced in 2014, FICO 9 is the latest credit scoring version. It includes the below key updates:

Key Features of FICO 9:

• Ignores paid collections to encourage consumers to resolve debts.

• Reduced impact of medical collections which consumers often cannot control.

• Considers rental payment history when reported to credit bureaus.

• Weighs high credit card balances more negatively.

• Provides finer segmentation of consumers into 13 risk categories vs. 8 in FICO 8.

The goal of FICO 9 is to increase predictive accuracy by incorporating new credit behaviors. However, adoption by lenders has been relatively slow.

FICO 8 vs. FICO 9: Key Differences

Now that we’ve seen an overview of both the scores, let’s discuss some of the major differences between FICO 8 and FICO 9:

• Medical debts: FICO 9 treats non-paid medical collections with lower severity compared to other types of unpaid collections. This can benefit consumers with past medical issues.

• Paid collections: FICO 9 ignores collections that have already been paid off, unlike FICO 8 which still considers them even after being paid.

• Credit card balances: FICO 9 penalizes high revolving credit card balances more harshly compared to FICO 8. Keeping balances low has a more positive impact on FICO 9.

• New credit: FICO 9 segments consumers into 13 credit risk categories compared to 8 in FICO 8. This increased granularity helps lenders assess new credit applications better.

• Rental information: If reported by landlords, FICO 9 factors in rental payment history while FICO 8 does not. This helps consumers with limited credit history.

While not drastically different, these changes do impact credit scores. We’ll now see which version scores better.

FICO 8 vs FICO 9: Which Score is Better?

Whether FICO 8 or 9 scores higher comes down to your specific credit profile and history. Here are some general patterns observed:

FICO 8 Scores Higher When:

• You have high credit card balances close to the limit
• You have few credit accounts
• You have paid off previous collections
• You don’t have rental payment history

FICO 9 Scores Higher When:

• You have low revolving balances and credit utilization
• You have medical collections or past medical debts
• You have many new credit accounts
• You have positive rental payment history

For most people, FICO 8 and FICO 9 scores are quite close, within 20-30 points of each other. FICO 9 is more sensitive to recent credit behaviors while FICO 8 looks more holistically.

Here are a few scenarios where the scores could vary significantly:

• If you carry high card balances, FICO 9 may be 50-60 points lower.
• If you have unpaid medical debts, FICO 8 could be 40-50 points lower.
• If you have limited credit history, FICO 9 may be slightly higher.

When is FICO 9 Used by Lenders?

The widespread adoption of FICO 9 has been relatively slow compared to previous updates like FICO 8.

Here are a few key points about FICO 9 usage:

• According to FICO, only around 10% of lenders use FICO 9 currently. Most still rely on FICO 8.

• Larger lenders like Wells Fargo and credit card companies have started using FICO 9. Many smaller lenders still use older versions.

• Specific industry-tailored FICO 9 models are used more commonly than the base FICO 9 score.

• Adoption rates are higher for auto and installment loans than mortgages and credit cards.

So while FICO 9 usage is increasing, FICO 8 still dominates the market. But over time, lenders may switch to FICO 9 as the predictiveness and data benefits become clearer.

Tips to Improve Your FICO 8 and FICO 9 Scores

While the specific weights and algorithms differ, both FICO 8 and FICO 9 reward similar healthy credit habits. Here are some tips to boost both your scores:

• Make all your payments on time – this has the biggest impact on FICO scores.

• Maintain low credit utilization below 30%. Clear balances monthly or quarterly.

• Apply for new credit only when needed – too many applications hurt scores.

• Build a diverse credit mix – avoid having only credit cards or only installment loans.

• Don’t close old credit accounts – having long credit history improves your scores.

• Resolve any collections, defaults or late payments – their impact reduces over time.

• Monitor your credit reports and dispute any errors with bureaus.

The fundamentals remain the same – responsible credit usage, low debt, and long history are rewarded by all FICO models. Focus on these to maximize your scores.

Which FICO Version Do Lenders Check?

When you apply for credit, lenders may check your FICO 8, FICO 9 or even older versions. This depends on their specific underwriting policies.

Here are some ways to check which FICO score versions lenders use:

• Many lenders mention the FICO version used on approval/denial letters.

• You can call lender customer service and inquire which FICO versions they use.

• Credit monitoring services like myFICO can display the FICO versions you have.

• FICO websites also have resources listing lenders using FICO 8 vs FICO 9.

Checking online forums and consumer complaints for a lender can also provide insights on whether they use FICO 8 or 9. While not definitive, it gives you a good idea of their practices.

How to Check your FICO 8 and FICO 9 Scores

Monitoring both your FICO 8 and FICO 9 scores is important to get a complete credit picture. Here are some ways to check your scores:

• Use free score services from your credit cards or banks if provided.

• Buy standalone FICO score packages from myFICO.com which provides all versions.

• There are some free FICO score offers without credit card requirements.

• Credit monitoring sites like Credit Karma provide VantageScore 3.0, not FICO, but can help you monitor credit changes.

We recommend checking your scores every 2-3 months to stay updated. When applying for new credit, check closer to the application date. Look out for score fluctuations and patterns to identify issues.

Key Takeaways – FICO 8 vs. FICO 9

• FICO regularly updates its credit scoring models to increase predictive accuracy based on new credit trends and data. FICO 8 and FICO 9 are the two most recent versions.

• While similar overall, FICO 9 is more sensitive to balances and new credit while FICO 8 takes a more holistic view. Medical and rental factors are also considered differently.

• For most people, FICO 8 and FICO 9 scores are within 20-30 points. But for some credit profiles, the variance can be larger.

• FICO 8 still remains the more widely used version while lender adoption of FICO 9 is gradually increasing.

• Focus on responsible behaviors like low debt, on-time payments and long history to maximize both FICO 8 and 9 scores. Regularly check your scores to monitor their progress.

While the FICO scoring models evolve, your credit fundamentals remain critical. Work on improving those, and your scores will rise over time whether lenders use FICO 8, 9 or even newer versions!

There isn’t one single “most accurate” FICO score, as different versions are used by various lenders and for different purposes.