FICO 08 – The Algorithm Has Changed

FICO 08 – The Algorithm Has Changed

Beginning last year, Fair Isaac & Co. implemented changes in how your FICO score is computed, calling the new system FICO 08. The model replaces the existing FICO model, which has remained relatively unchanged since the 1980s.
Per Fair Isaac, here are the key changes in the new model:

• Do Authorized User Accounts Still Work? One of the credit-repair tricks that became popular in recent years was paying thousands of dollars to be listed as an “authorized user” on the account of someone with good credit (usually a stranger), thereby improving your FICO scores enough to get into that home or auto loan immediately. That stops with FICO 08, and rightfully so – because this practice was an obvious form of fraud.
  Here’s the good news-the new model will still allow legitimate authorized users such as a spouse and/or family member.  And I can tell you confidently that this credit building technique still works for spouses and children who have the same last name as the credit card owner.  There have been two cases in the last 60 days where I have seen my clients’ credit scores jump 50-60 points after being added to their spouse’s credit card account.
  It’s always a good idea to build your own credit, when possible, because that gives you power and control, but as a last resort this option will help. To maximize the benefit of this option, you should make sure that the account you are being added to belongs to someone you trust, has NO negative history reporting at all, has and keeps a balance under 30% of the limit and is at least 2-3 years old. 
• Having just one big black mark on your credit, like a repossession, will matter less than it used to if your report demonstrates responsibility overall.
• Collection accounts with balances less than $100 will not impact the credit score any longer.
• Maxing out those credit cards will drag your score down even more than it used to! FICO 08 increases the emphasis on having available credit.
• Having a mix of credit is also more important in FICO 08. This means you MUST have at least 1-2 active major credit card accounts.

FICO said that the new model would have less impact on credit scores under certain circumstances, however, in my experience, the new model appears to be producing lower scores under almost every circumstance.  Especially when it comes to credit card balances and late pays.   So if you are one of those people who are out there wondering why your credit scores have dropped in the past few months-even though nothing has changed, this could be why.
http://sntk.in/bw

RECENT CHANGES IN CREDIT SCORING AND REPORTING AND HOW THEY AFFECT YOU

RECENT CHANGES IN CREDIT SCORING AND REPORTING AND HOW THEY AFFECT YOU

While the roots of the modern credit report can be traced all the way back to 1898, the numerical credit score wasn’t devised until the 1950s and didn’t become a major part of the American financial system until the last twenty years. In 1956, Bill Fair and Earl Isaac devised analytical tools that attempted to quantify the risk of loaning an individual money and launched a company based on this scoring system. Their company was called Fair Isaac & Co., better known by the acronym FICO. After several decades of success in Europe, FICO’s system caught on in the United States beginning with Equifax in 1989 and continuing with the other two major credit bureaus, Experian and TransUnion, in 1991. Since then, the now-familiar three digit score from 300 to 850 has become an integral part of the American credit system. 
The many factors that go into determining a credit score can seem complicated and daunting, and it’s taken a while for most consumers to get up to speed about how their use of credit affects this score. But just when you thought the credit score reporting process couldn’t get more confusing for consumers, some major changes have taken place in the last year with the rollout of the new FICO score model known as FICO 08.
It’s always good advice to be proactive in addressing and fixing any credit challenges. However, it’s more important than ever before to take a hands-on approach to your credit, and understanding how recent changes may affect your credit scores is a key part of being proactive.

http://sntk.in/bw

How do I get a free copy of my credit report?

How do I get a free copy of my credit report?


By law, each of the nationwide consumer reporting companies, Equifax, Experian, and TransUnion, must provide a free copy of your credit report, at your request, once every 12 months. You can access this program in one of three ways:

• Go to http://www.annualcreditreport.com; or
• Call 1-877-322-8228; or
• Complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can download the form with instructions at http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt156.pdf.

For a complete list of the ways that you can your credit reports and scores, ask for our Credit Resource Article: Pulling Your Credit Reports & Scores.


http://sntk.in/bw

Is it a good idea to hire a credit repair company?

Is it a good idea to hire a credit repair company?


If you are ready to purchase a home, or refi your existing loan, and you feel that the credit challenges you are facing are too much, and that you do not have the time to do the work or the necessary follow-up, then it is a good idea to seek professional help. Yes, there are companies out there who have given the repair industry a bad name, but just like attorneys, doctors, and many other professional industries, there are legitimate credit improvement firms that can help you. If you would like to get in touch with someone about your credit, please give me a call and I will refer you to a reputable company that I trust.
For more information about credit repair agencies, ask for our Fact Sheet: Avoid Credit Repair Scams.