NEW YORK (MainStreet) — FICO 9 is making the news rounds on financial planning and credit websites. Basically, it’s the newest version of the industry standard FICO score. But while a lot of rumors are making the rounds about how it’s going to affect the average consumer, many of these are incorrect or rife with misconceptions. So how do you separate fact from fiction when it comes to FICO 9 and your life? Read on to learn what you need to know about FICO 9.

Save Cash on Payments! Compare Low-Interest Credit Cards Now

It’s Not Getting Rolled Out Right Away

Most consumers think that when FICO 9 gets rolled out that it’s like installing a new operating system on a computer. The analogy might be apt, but not in the way that most people think it is.

View Today's Highest Savings Account Rates


Randy Padawer, a consumer advocate with LexingtonLaw, points out “some people are still using Windows XP even though it’s not supported anymore.”

Gerri Detweiler, director of consumer education at Credit.com, explains how the rollout of FICO 9 works: “FICO would love it if every lender adopted their newest version, but it’s a sales process.” Basically, FICO 9 will be available to lenders if they want it. Before they adopt it, they’re going to want to know that it’s a more profitable lending model than what they’re using already.

People With Thin Files Are More Likely to Have a Score

Do you not have a credit score? It’s probably because you have what’s called in the business a “thin file.” This means that FICO doesn’t feel they have enough information to give you a score.

VantageScore, FICO’s chief competitor, gets a lot of its business off of being better at scoring people with a thin file than FICO. However, FICO 9 seeks to change all of this.

“People with a thin file are more likely to have a score,” says Padawer. This is because FICO is going to begin considering utility and rental information. The problem: “Credit bureaus have no plans to engage smaller renters or utility providers around the country at present,” Padawer says, quickly adding that “I sort of doubt they will for some time.”

“We don’t know which lenders are going to be using this version of this score,” says Detweiler. Nor can you find out -- that’s private information. “Not only will the person on the phone not know what scoring system the company uses, even if they do know, they’re not going to tell you.”

Any Bump In Your Score Is Overrated

One of the reasons why there’s been so much buzz when it comes to the new FICO scoring system is that a lot of people -- incorrectly -- think they’re going to get a huge bump in their credit score. “FICO’s primary customers are underwriters,” says Padawer. “They’re not in the business of watering down their secret sauce.”

In fact, the biggest changes have to do with collections.

Collections that are paid or are medical in nature will drop off and you will see some increase in your score. How much of an increase? Padawer states that it’s going to be about 25 points.

This will mostly be for consumers who have credit scores down in the 400s and 500s. “An extra 25 points is not going to get you a house or a car loan,” he says.

Of course, this only applies to lenders who are using the new scoring models anyway. Most lenders will not at first. Which ones will is just about anyone’s guess.

“People tend to think that they have one FICO credit score,” says Detweiler, “There are a suite of credit-scoring models. Some are for the auto loan industry and others are for the credit card industry.” There are even credit-scoring models that affect your auto insurance payments.

“Even if creditors do upgrade immediately,” says Padawer, “the changes will be minimal, even in accordance with their own disclosure in their own press releases.”

So what has FICO done? “It’s not a major change in credit scores, but it is a major PR coup for FICO,” Padawer says.

--Written by Nicholas Pell for MainStreet

View Today’s Highest CD Rates