March 26, 2009
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‘FICO 08' Finally Instituted, Pt.4
Final items and Summary Tips.Types of Other credit accounts: Although already included in credit card scoring in the past, things like home mortgages, car loans, etc. have taken on more significance. In light of our devastated economic situation, the reasons should be obvious.
‘Piggy-back' relationships: The basic premise of extending good credit to authorized credit card users benefits all in spirit. But, we've always got those slimers out there to pervert the system and abuse it for their own ends. The slimy and sleazy practice of illicitly ‘selling good credit to bad-risk people' by adding them as ‘authorized users' on credit cards caused the demise of the program for years. As a result, the benefit had to be discontinued altogether. But now, FICO 08 is giving the benefit back in a much-more controlled environment. The only eligible beneficiaries as ‘added credit card users' (authorized) will be direct family members.
We can already see the comprehensive beauty of the new FICO 08 credit card scoring system. It's built on a holistic perspective by starting with the big picture. Pieces of the puzzle are weighted according to their significance in the picture. ‘Little things' here look like little things and are not given equal weight with the more significant items.
Please note this series isn't intended to explain the entire new FICO 08 system. Only to highlight significant differences from the old system. If you're not familiar with the old system, please review my full FICO 08 assessment series entitled: "Rules of FICO'08 in 2009". The following are my tips for taking best advantage (and working with) the new FICO 08 credit card scoring system:
o Late Payment (notice this is singular): Always be extremely mindful of ‘due dates' and pay credit cards early. But don't fret if, in spite of your best effort, it happens ONE TIME.
o Don't sweat the small stuff: Issues that amount to under $100 will not have much effect. This is an excellent repellant against the slimy collections rats who like to carve up a $300 bill into six separate accounts so they can nail you six times on your credit report instead of only one time.
o Keep all those old credit cards active: Use them at least once every 6mo. to keep them active. They can help your new score greatly.
o Give your family a Piggy-back ride: Take advantage of this opportunity while you can (make sure you can trust them, though).