FICO 08: How It Affects Your Credit Score

Your credit score can have an impact on many aspects of your life – whether you can get a mortgage, loan, or credit card, the rate you receive, whether a landlord will rent to you, and even whether you get certain jobs. The FICO score, produced by Fair Isaac Corporation, is the credit scoring model most commonly used by creditors. While the basic factors considered (payment history, level of debt, length of credit history, types of accounts, and pursuit of new credit) have not changed, with their updated model, FICO 08, Fair Isaac has made some adjustments to the way credit scores are calculated.

There are several actions that will lower your score more under FICO 08 than the previous version, including having high levels of debt relative to your credit limits, lacking a variety of accounts (such as credit cards and loans), and possessing few open, active accounts. There are also some positive changes. Collection accounts, which can be very damaging to your score, are ignored if the original balance was less than $100, and having a late payment or other negative information on one account does not hurt as much if your other accounts are in good standing.

Are you concerned about your credit score? As a benefit of your membership, you have access to BALANCE, a financial counseling agency that offers a free credit report review service. To find out more about this service or schedule an appointment, call BALANCE at 888-456-2227.

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