New Credit Card Scoring Could Raise your FICO!

I blogged yesterday regarding some of the new rules that recently went into effect that positively affect users. Day Two of my Three part series regarding New Credit Card rules focuses on the new model being used to determine FICO scores. The new model is overlooking small problems a consumer may have had, problems such as a late utility bill payment or parking fines that are lingering in collections, when determing a consumers FICO score. Consumers are also unlikely to be penalized for a one-time late payment if it occured more than two years ago and is less that $100(The debt however is not wiped away).

For those consumers who are a low risk of default on credit, they should see their scores rise, but those who are a greater risk may see their scores fall.  Below are some way to improve your credit score, regardless of where you stand currently:

-Monitor your credit reports and correct errors. Look not only for negative events on your record, but also examine the credit limits to make sure they’re accurate. If the credit limits appear lower on the report than they actually are, that has the potential to hurt your score.

-Pay bills on time and keep card balances low. Your payment history, and the amount you owe on your accounts as a ratio of the amount of credit you have access to, are important components of your score. FICO 08 is more sensitive to high credit usage, and consumers may see a lower score if their reported balance on one or more cards is near the account’s limit.

-Take on new credit only when you need it. Some credit cards come with great offers, including a percentage off your bill if you sign up for one at the cash register. If you accept, make sure you’re getting a big enough benefit to make it worthwhile—taking on additional credit could end up dinging your score.

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