Fair Isaac, which produces the widely used FICO credit
score, typically upgrades its formula every few years. The FICO 10 Suite
is expected to be adopted by many lenders in the next year or so. A
version of the new model, called 10T, will evaluate credit card usage trends
over 24 months rather than provide a monthly snapshot. Lenders feel using FICO 10,
will give a better idea of those with higher risk.
What can you
do? Be sure to check your credit report periodically at the three major credit
reporting agencies—Equifax, Experian, and TransUnion. That data is used by FICO
and other companies to create your credit score.
About 35 percent of the FICO score is based on your payment
history—that is, how often you pay on time. If you can't pay off the full
balance, be sure to pay the minimum amount to avoid a late payment.
Your credit
score is also determined by utilization—how much of your available credit limit
is being used. So, avoid maxing out your cards. Be cautious, as well, about
applying too often for new credit. If you don't already have a lot of other
credit information, new accounts will lower your average account age, which
will ding your FICO score. Even if you have a long-term credit record, opening
a new account can still lower your score.
Your credit score determines how much you’ll pay for
home and auto insurance and so much more. Keeping your score high will save you
money. For more information go to yoursafemoneyshow.com.
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