Your Credit Score Could Soon Go Down…. Or Up!
By myfirstcho6600809, Jul 15 2020 06:56PM
FICO recently announced changes in their scoring system that assesses a person’s credit risk.
The new model will take a look at not only a person’s payment history, but also include account balances for the past two years, giving lenders more insight as to how consumers are managing their credit.
Those with a high amount of credit card debt and loan-to-ratio-value (LTV) ratios could see their credit score drop significantly, while those who consistently make on-time payments and don’t carry high balances will likely see a slight increase on their credit score.
As it has been in the past, paying off credit cards monthly will always result in a better score.
FICO estimates than approximately 80 million people will see a change in their score of 20 points or more, up, or down. An additional 110 million consumers will see only a modest change to their score if any at all.
These changes are due to go into effect over the summer but may take a while to notice, as many lenders may continue to use older FICO models when evaluating a consumer’s credit worthiness.