Your credit score is about to change, perhaps dramatically. Not because of anything you’ve done, but because the Fair Isaac Company, which calculates your FICO credit score, is changing the way they determine your score. Will your score rise or fall? Let’s take a closer look.
1. Your FICO score will be based on how you have used credit over the last two years. Lenders want to see a trajectory of your recent credit habits instead of a snapshot of where you stand in your current situation.
2. Personal loans will be given greater weight in your credit score. Your score will take a hit if you have more personal loans than credit card debt.
3. Missing payments will have an ever bigger impact on your score. If you have been falling behind recently, your score is going to drop more sharply. If it’s been a year or longer since you’ve missed payments, your credit score will rise.
4. How much of the credit that you have available that you actually use—what’s known as the utilization rate—will be weighted more heavily.
These changes in your FICO score make it more important than ever to monitor your credit report and score and remove any errors. My affiliate Credit Blueprint specializes in removing out of date, inaccurate or non verifiable items such as collections, judgments, liens, foreclosures, late payments, charge-offs and settlements.
Resource: Credit Blueprint
As a personal finance expert, Jordan recognizes quality solutions, forming affiliate relationships to help improve people’s financial lives.