Watch your credit score.
That鈥檚 generally a good idea if you plan to borrow money to buy a vehicle or a home or to use credit for a whole range of other purchases.
But it鈥檚 even more important now because a big change is coming in the way Fair Isaac Corporation (FICO) calculates your credit score. FICO estimates that it eventually will affect nearly 200 million Americans starting this summer and continuing for up to two years afterward, depending on the time it takes credit bureaus and lenders to adopt the new model.
FICO plans to begin using 鈥渢rended data鈥� that takes into account up to two years of credit usage 鈥� and for the first time breaks out personal loans used to pay off credit card debt. The idea is to provide lenders more information about how consumers manage their credit.
About 110 million consumers are expected to see up to 20-point changes up or down, while 40 million could see an increase of 20-plus points and another 40 million a decrease of 20-plus points.
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鈥淐onsumers with recent delinquency or high utilization are likely going to see a downward shift, and depending on the severity and recency of the delinquency, it could be significant,鈥� Dave Shellenberger, vice president of product management at FICO, recently told U.S. News & World Report.
鈥淐onsumers that have been managing their credit well 鈥� paying bills on time, keeping their balances in check are likely going to see a gain in score,鈥� said Shellenberger, according to The Washington Post.
FICO credit scores, which are based on data from credit bureaus Experian, Equifax and Transunion, range from 300 to 850, with a national average score of 706 last year. Generally, the scores are based on the following factors: payment history (35 percent), amounts owed (30 percent), length of credit history (15 percent), new credit and credit mix (10 percent each).
Your credit score may not be the only factor to determine whether you receive a loan, how much financing you receive and what interest rate you pay. 国产黑料吃瓜泄密入口 Consumer USA (SC), for example, uses a credit score plus other sources to determine auto financing.
But knowing your score should help you have realistic expectations when you apply for credit.
You are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies, according to the Federal Trade Commission.
These statements are informational suggestions聽only聽and should not be construed as legal,聽accounting聽or professional advice, nor are they intended as a substitute for legal or professional guidance. 国产黑料吃瓜泄密入口 Consumer USA is not a credit counseling service and makes no representations about the responsible use or restoration of consumer credit.
