02-10-2009 07:27 AM
This morning on Fox News in St Louis there was a financial counselor on saying that FICO is changing how it deals with collections. He stated that collections under $100 will not be figured into FICO scoring. This seems suspect. Does anyone know if this guy knows what he is talking about?
He also stated that revolving credit use will figure more into a persons score.
02-10-2009 07:33 AM
Here is the article I read.
A system widely used in determining credit scores has sharpened its evaluation system, possibly improving many consumers' scores.
FICO will still use the same scoring range and factors to calculate the score, but it is expected to be about 5 to 15 percent more accurate.
With the new model, consumers won't be penalized if they have just a couple small infractions, like late payments.
Habitual late-payers will be penalized more.
Also, scores won't be hurt by minor infractions less than $100, like parking tickets or library fines.
"They've gone back and tried to make course corrections to help those people maybe get a better score," said Donald Leu of the Consumer Credit Counseling Service.
Leu said the new model also protects the creditor.
Credit counselors said the news core will likely have the biggest impact on those with credit scores in the 600 range, which is considered sub-prime.
Transunion will be the first credit bureau to use the new Fico system. Equifax is expected to offer it later this year.
It's a good idea to pull your credit report once a year and check it for accuracy.
02-10-2009 07:36 AM