- Understanding your FICO 08
Although it got a late start, FICO '08 has now been rolled out by all three Credit Bureaus, Equifax was the last hold out.
It has been over 10 years since the last update. Lenders have been anxiously awaiting the new scoring system because
FICO advertised that using the new algorithm will decrease the number of defaulted loans by 5-15%. FICO did not change
the scoring range or the 5 scoring categories so you will not have to learn a whole new system. FICO did change how they
view certain items that go into your score in order to better predict when a creditor might default.
The biggest change to the way people use their credit will only impact a relatively small number of users. Those people
who have been put onto someone's credit as an 'authorized user' will no longer benefit from the official card holder's credit
history. It seems that unscrupulous credit repair companies were getting people with great credit to 'rent out' their credit
histories to anyone who wanted to pay to become an authorized user. Now the only people who can become authorized
users must be related to the card holder. While they can still be authorized users, they will no longer get the benefit of the
card holder's good credit history. This change has a huge impact for new credit users like teenagers and for many spouses
who do not have credit of their own.
So, does anyone get a break with this new system? The answer is yes. Those with only one late will not be as severely
impacted, also those with a good mix of credit will see more benefit from their good use of credit. People who have
multiple lates will see a more severe drop in their score as well as those with high balance to limit ratios.
There are mixed messages so far, but it seems that overall the new scoring system should help out both lenders and those
with good credit. It is those that are having credit issues that will feel the largest negative impact.
Linda Adams is an innovative and seasoned facilitator/educator with more than 20 years experience designing and
implementing programs for audiences of all ages. She is dedicated to helping others realize how important their credit is
to every facet of their lives.
Credit Article by Linda Adams - The Clean Credit Queen
Good Day and Good Credit
| Helping Real Estate Investors, Small Business Owners, and Regular Consumers Find Solutions to Credit Challenges |
| Linda Adams - The Clean Credit Queen™ |
 |  |  |  |  |  |  |  |
| 2008 Copyright © LDRA Performance Consultants Inc. All Rights Reserved. |
Linda Adams, The Clean Credit Queen is not a registered investment advisor and the information provided on this website should be considered educational in nature, but it is not a substitute for legal or professional financial advice. If you believe you need the help of a Certified Financial Planner or other investment counselor, please seek a qualified professional. |
| Home |
| Got Credit Problems? Credit Education Works. Get Your Credit Out of the Red and Into the Green! |