How will the FICO 8 changes effect credit scores?
What Changes will the FICO 8 model bring to our credit files? watch to find out!!Changes to the Scoring System FICO 8 is one of the latest versions of the scoring model. Changes to the FICO 8:
High credit utilization: FICO 8 weighs the amount of credit you are using, in comparison with how much is available, more than it used to in the previous model. This means if you are close to maxing out your credit cards, it will matter more now than it did in the past.
Authorized users: A couple years back, FICO toyed with the idea of not counting authorized users. However, there was an outcry against this, since being an “authorized user” on an account can be helpful to spouses and children (usually students) looking to build credit. FICO 8 continues this practice of considering authorized users.
Isolated late payments: In the past, it used to be that a single late payment could cause significant damage to your credit score. FICO 8, though, takes into account the fact that sometimes mistakes happen with even the most responsible of us. The new algorithm takes into account the number of late payments you have, and while you are still dinged for an isolated event, the impact shouldn’t be as great as it was before.
Small balances: Many borrowers will like this next change. FICO 8 no longer pays attention to collections items with a balance that was originally less than $100. That means that a small bill you forgot to pay won’t ding your credit score the way it used to.