This summer the Fair Isaac Corporation is rolling out their updated version of the FICO score. Most of us are familiar with the three digit credit score system that most organizations across the country use and Fair Isaac Corporation are the original creators of this system. They’ve updated their model and made a few tweaks to improve certain aspects of their scoring system. This isn’t the first update to the scoring system, and while it appears to be a relatively minor update, it’s important to learn the ways your credit score might be impacted and what you can do about it.
From analyzing the changes, it appears that people with lower credit scores now are more likely to be affected than those with sound credit. If you want to increase and stabilize your credit score before the new FICO Score 10 rolls out across the board, you might want to look at improving your credit score quickly by using Coast AU Tradelines.
What’s Changing in FICO Score 10?
The most obvious change with the new update is based around how the company evaluates your debt. The score has actually been split into two types for the first time: FICO Score 10 and FICO Score 10T. FICO Score 10 will focus more on the total amount of debt that a customer has and how quickly they’re paying down their debt which is what we’ve seen in the past with FICO Score. Whereas FICO Score 10T will look more at historical data and the relationship a consumer has had with their credit card debt over a 24 month period. This is more of a historical focus on debt than we’ve seen with previous FICO Score updates. The goal of improving the FICO Score is so that lending companies can better assess who are good candidates for lending, and minimise their risk by reducing credit card and loan defaulting.
How Will the New FICO Score 10 Impact you?
It’s hard to predict exactly how much your credit score is likely to change, however Fair Isaac Corporation estimates that approximately 110 million consumers will see their credit score change by less than 20 points – either up or down. This is a relatively minor change, but if your credit score is already so low that it’s impacting what kinds of credit you can apply for, then you may be feeling anxious about the changes. The good news is that many companies are quite slow to implement the new FICO Score, many of them still use the FICO Score 8 which was released over a decade ago. This means that you have a bit of time to improve your credit score and tidy up your credit habits before this change is likely to impact you.
What Can You Do?
The best thing you can do to prepare for the new FICO Score 10 changes is to improve your credit score. The higher it is and the cleaner your credit habits are, the better you will be able to weather any changes. You’ll also find yourself able to negotiate better credit rates and have more credit lines available to you in future. Invest a bit of time into researching how to quickly increase your credit score so that you’re better prepared to handle any credit scoring adjustments.
It’s impossible to know what scoring system a lender uses, so it may be very hard for you to tell how much these changes are going to impact your specific credit situation. However, by being aware of how the scoring system is looking to change and by improving your overall credit score, you should be able to minimise the i