April 13,2009
-
Credit Score: FICO 08, Pt.1
Look for better times ahead.With so many troubled credit card consumers and the upheaval in Washington about protecting these consumers, it's good to know that something good is already in the works. The new FICO '08 standards are already released and the credit card industry is expected to be implementing them at this reading. We haven't noticed any marked changes thus far that would reflect this radical departure from the old ways, however. The biggest changes to expect would be in the area of good and responsible consumers. Every day, we read about credit card consumers with excellent behavior patterns being slammed over little things and nuances and we are riled by it. This should go away. The best assessment in comparing this new system to the prevailing one is how much more fair and accurate it is. The petty things go away.
It's worth reviewing the major differences so we can know what to expect and demand in the near future. The differences are listed now and further explained afterward.
What's on the horizon FICO 08'?:
o Credit history; Now, holding onto old accounts in good standing becomes important. Having more open credit card accounts in good standing will help your score.
o Credit Utilization; The rules don't change but become more important.
o Number of Late Payments; No longer will we get socked for missing one credit card payment every few years.
o Number of On-time Payments; Our good reputation of being consistent will benefit us more.
o Nature of the Payments; As should have been done long ago, defaults are better scaled by severity. Petty debts will be treated as, just that.
o Other Miscellaneous Variables; For one thing, piggybacking' is coming back. This time, however, the flagrant and significant abuses will be curtailed.For credit card holders already familiar with the old FICO Rules, it can already be seen as being much more fair than what we've all been going through.