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.

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