Fair Isaac Corporation, otherwise known as FICO, created a new rating system that will change how potential lenders may view your credit history.
FICO is a household name that is synonymous with credit scores, especially to anyone who has ever applied for a home loan card, auto loan or credit. FICO estimated that 90% of large banks use their rating methodology for analyzing the creditworthiness of consumers.
The new FICO score, officially called FICO 08, has been created to more accurately predict the credit risk of an individual. It will be more lenient on people who may have had some credit slip ups in the past, but otherwise would have had enough responsible lending practices and much more severe on those who repeatedly credit errors.
FICO provided these valuable examples of how the new FICO 08 score can impact different types of people based off of their credit history.
This is great news for consumers who are actively working to improve their credit and adopting healthy credit habits and even more reason for people usually have bad credit to make moves to improve.
The FICO score 08 also makes it extremely important to have a complete understanding of the contents of your credit report as inaccuracies could cost you once the new formula begins to calculate the scores. The simplest and most effective way to get a complete understanding of your current credit report is to sign up for a credit report monitoring service. These services give you access to your credit report, credit score and alert you to any changes in your credit report.
All credit bureaus including Equifax, Experian and TransUnion, to provide these services and we reviewed and compared all these credit report monitoring services for the benefit of our readers.