The new FICO 08 credit scoring model is out, and over 400 lenders are already using it.
The credit scoring model was redesigned to give lenders a better idea of your credit risk.
Will it help your score?
Here are some key features:
- Collections under $100 will no longer hurt your score. This means a medical bill you never got, or a small utility bill you didn’t pay will no longer undo months of paying all of your (other) bills on time.
- The new model will be more forgiving of people that had a single major problem two years or more ago, but otherwise their accounts are in good standing.
- The new credit scoring model will put an end to piggybacking. This is an unethical practice, very often suggested by unscrupulous credit repair companies, where people paid someone they didn’t know to become an authorized user on their accounts. A spouse or a child are the only people that can be added as authorized users and receive credit reporting benefits.
It’s nothing major, but it could help you raise credit score.
{ 2 comments… read them below or add one }
I think that FICO 08 is definitely a step in the right direction. I like the fact that FICO is at least seeming to take into account a little more human elements in computing the score. I think it would be very easy for them to not address the change in climate and rather want people to adjust themselves to how to go about fixing their score based on the older models.
I know that the effect isn't going to be immediate. After all, you have no way of knowing what model your particular lender will use. I do think though its a step in the right direction and shows that FICO has good intentions. They seem to be committed to trying to provide the most honest and accurate assessment of a person's risk to lenders.
That's really all we can ask of them. We are all human, and its nice to know that they just might be as well.
Check out my blog on FICO 08 at….. http://www.thedebtgazette.com/2009/09/new-fico-sc…
Frank,
Thanks for your comment!
I agree completely that it is a step in the right direction! When I was an underwriter I can't tell you how many people I saw with perfect credit except for a small collection. It never made sense that one small ding could hurt a score so bad.
Thanks again for stopping by!
Wendy
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