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FICO to Make Important Changes to Credit Scores

Posted by: Lisa Nichols | Mar 03,2008

FICO is making some updates to the way that they calculate credit scores- and many people will benefit from the change. Rather than “punishing” someone who makes a late payment by decreasing their credit score, the new FICO score will look more at habits and trends of individuals to get an accurate picture of credit worthiness. FICO credit scores will change, says Money magazine, to reflect a difference between someone who makes one late payment and people who frequently pay their bills late. It’s an important change and should quickly begin to affect FICO scores when the change is implemented.

In the past, multiple loan inquiries hurt an individual’s FICO credit score. It was a source of confusion for many, who didn’t understand that loan shopping put credit scores at risk. With the new and improved FICO score, individuals who shop for loans won’t be adversely affected in their score. It’s a change the company made to acknowledge that individuals have more credit and more loans than they did in past years, says Money.

The new FICO credit scores will reward individuals who use their credit responsibly. As Experts on Credit bloggers have been saying since the inception of this website, establishing a solid credit history, having a mix of installment loans and credit cards and paying for all of it in a responsible way will continue to improve credit scores. With the new calculation, individuals who manage their credit responsibly will see an even bigger improvement in their credit history and FICO score. The changes to individual FICO credit scores will begin in spring.

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