Credit Scores Set To Change With FICO 08 – How It Can Affect You.
I recently read a very interesting article on how the way consumer credit scores are calculated will be changing in the next year. The Fair Isaac Corp – creator of the FICO scorehas unveiled a new scoring model for determining your credit score dubbed FICO 08. Currently FICO scores range from 300 to 850 and are based on consumers’ credit histories. This score “in theory” should reveal the risk associated with lending a person money and their chances of default. The lower the score, the more chance for a default. A Good credit scoreis anything over 700 and a low score can severely restrict a person from buying a house, car, renting, turning on utilities, credit cards, and even getting into a good college.
The Fair Isaac Corp explained that the new method is more forgiving on minor slip-ups and will more accurately predict a borrower’s risk of defaulting on loans. FICO 08 will still take into consideration the same factors of a person’s financial history including indebtedness, length of credit history, and number of open lines of credit, the main difference is the weight these factors will carry.
YOUR FICO SCORE MIGHT GO UP IF…
You maintain various lines of credit, such as credit cards, or car / home loans. This demonstrates your ability to successfully manage different types of loans. YOU WILL BE LESS PENALIZED IF YOU ARE DELINQUENT IN ONE ACCOUNT, BUT ARE IN GOOD STANDING ON THE OTHERS!
YOUR FICO SCORE MIGHT GO DOWN IF…
You have many delinquent accounts. This has always had a negative affect on your credit, but more so after the change.
NO MORE PIGGYBACKING
This is a popular method of adding people with poor credit to those with good credit to increase their credit score. Currently by being added as an authorized user to a person with a good credit account can dramatically increase your score…THIS WILL NOT HAVE AN AFFECT ONCE THE CHANGE OCCURES. Parents can still co-sign for their kids, it just will have no affect on the kids credit score anymore!
In today’s declining real estate market here in Arizona, and as families go through the Foreclosure or Short Sale process, credit concerns are more important than ever. Being proactive in monitoring and maintaining your credit report is crucial to your future, and we at www.CodySperber.com recommend using www.annualcreditreport.com to monitor your credit report every 12 months. If you need actual credit repair, I recommend using www.GenesisCreditGroup.com. Genesis is a local credit repair company that specializes in helping homeowners that have gone through a foreclosure or a short sale fix their credit withing 6-12 months. I have sent many of my clients to them and they are all happy with the service. If you are falling behind on your mortgage payments and would like to talk with a local Arizona Foreclosure Expert, please feel free to call me anytime at 480-861-8732. Also, if you are looking to Sell Your Arizona House Fast, remember, I PAY CASH FOR HOUSES.
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