The proprietary system that FICO uses to generate your credit score is getting the biggest makeover it has ever had. Starting in 2009, there will be some changes to the mathematical model used by FICO to determining credit scores. And it may be to your advantage. (But is could also hurt you.)
CLICK HERE TO GET YOUR CREDIT SCORE…FREE!!!
Finer shadings of “good”, “fair” and “bad” credit
One of the biggest differences will be the way that FICO recognizes different levels of consumer habits. For instance, right now if you are late for a payment — you are late. And your credit score falls indiscriminately. The new FICO credit score will sense finer shadings, looking at how often you are late with your payment. A single late payment will not be as damaging to your credit score as it has been in the past.
Because of new technology, and because of how well consumer habits are tracked, the FICO credit score is possible. The downside is that consumer habits (including what you spend your money on) can also be incorporated into your credit score.
Starting in January 2009, you can expect to see changes to your credit score. Kiplinger reports that a large number of consumers (between 40% and 50%) are likely to see a shift of around 20 points in the credit score — either up or down. So keep an eye out.
December 22, 2008 at 5:31 pm
[...] new FICO score will include finer distinctions on a number of factors. Different degrees of credit-worthiness will [...]
December 23, 2008 at 1:25 pm
My score just changed last night (12/22)…dropped almost 30 points with Equifax and Transunion, but went up almost 20 with Experian. I made sure that nothing had changed on my end, so it looks like they’re implementing this early. Really screwed me over – I was going to apply for a mortgage today, but now I don’t qualify.
December 23, 2008 at 4:32 pm
This will be good news for many, but what about those people who manage and have the fiscal responsiblity not to use credit cards? It is disturbing to me that those people who spend within their means score lower than those who spend on “credit.” I guess the point is you need to have credit to score….
December 24, 2008 at 1:12 pm
@Sarah: That’s really harsh. I think that’s too bad that things had to happen that way. It is important to understand that sometimes it takes 30-60 days for something to appear on your credit report, depending on when it is reported by your creditors. Also, the three have their own systems of credit scoring, as well as the VantageScore, which they came up with to compete with FICO. Find out from your lenders what they use to get your credit score, and go to a local lender who might be able to work with you.
@Jennifer: I agree that it is too bad that we’ve reached a point where we need a certain level of debt to do anything, from getting a job to getting a good insurance premium to renting an apartment. Those who eschew credit and debt have the hardest time of all. And that’s too bad.
January 5, 2009 at 4:03 pm
[...] issue is credit score. You may be approved for a home mortgage loan or for refinancing, but you will not get the best [...]
January 8, 2009 at 1:44 pm
[...] January 8, 2009 Credit Card Companies Continue Closing Accounts Posted by mmarquit under Credit Cards, Money Tips, News, personal finance The latest buzz right now in the world of personal finance is that credit card companies are closing accounts — without notice. The way card agreements are written, this is perfectly legal. However, it can have negative consequences when it comes to your FICO score (even with the new scoring formula). [...]
January 13, 2009 at 8:17 pm
Here’s an interesting article you may find useful:
http://anewhorizonorg.blogspot.com/
March 16, 2009 at 8:34 am
These are excellent tips! Taking such measures are crucial in these times. As per the recent statistics anyone having a credit score of above 700 would be considered more worthy of credit but if it were less, then the credit report would reflect a trend towards high risk. A score of 350 is regarded as extremely high risk and that of 850 is regarded as extremely low risk. Agencies calculate the FICO score based on 5 areas namely,types of credit used,current level of indebtedness, payment history, length of credit history, and new credit. Nice post indeed!
April 26, 2009 at 2:59 pm
In my opinion, the FICO scores overall are not fair. The poor range for example is from 330-620 and fair is 620-660 which is a small range and good is from 660-720 even smaller range. My question would be why is the poor range so wide? I feel the ranges should be spread out a little more evenly for example, poor: 330-550 fair: 550-650 good 650-750 and so on.
June 4, 2009 at 3:21 pm
This was a great help to me so thanks for the advice!
September 7, 2009 at 3:14 am
It is really dificult to get a credit card if you have poor credit. However, it is not imposible. You just need to plan very well what todo and look for help if needed.