FICO Score Changes Mean Higher Scores and Lower Interest Rates For Consumers

FICO credit-scoring system is being revised to reduce the negative effect of overdue medical bills and to quit penalizing consumers who pay off debts that had been assigned to collection agencies. The changes to the hugely influential FICO scoring system could make it easier for millions of Americans to get loans at lower rates and eventually save consumers billions of dollars.

For consumers whose only major delinquency is an unpaid medical bill, the changes would increase a credit score by 25 points, according to Fair Isaacs Corp., whose FICO credit ratings are the basis for scores published by the three big credit-rating agencies.

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Tips on Managing Credit

Time you realize the cold hard truth: to the big banks, you’re nothing but a number.  All that matters is your credit rating, otherwise known as your FICO score. It’s a number between 300 and 850 based on your financial history. Your FICO score helps the banks decide whether you qualify for charge cards, car financing, a mortgage, or insurance.  The higher your score, the lower your interest rate. More than a third of Americans have a rating below 650, even as lenders are tightening requirements for loans. Now you need at least 750 to be immune from the current credit card crunch. Don’t despair. Take these steps to improve your score.

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Myths About Your Credit Score

When I saw the subject article on Yahoo! Finance, I was pleased to note that my EQ article “Take Control of Your Credit Rating ” covered these myths in detail. Take the quiz and see if you are armed with the necessary information.

Myth #1: Closing a card after paying off a massive debt load is a fine idea.
Myth #2: Your employment history impacts your score.
Myth #3: Financing a big purchase — like a new home or car — will lower your score.
Myth #4: The older you are, the higher your score.
Myth #5: Checking my score will lower my score.

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Take Control of Your Credit Rating

Are you one of the people that doesn’t understand how often decisions that affect your life are determined by your creditworthiness?

Most folks already know that lenders evaluate whether or not to extend you credit for purchases or loan you money for a home mortgages based on your credit scores.  You may know that your interest rates and terms of the credit or loan agreements depend on your credit history which is reflected in your score. Unfortunately, many people don’t know that your credit score affects many other things e.g., hiring decisions (whether or not you get the job or promotion) and leasing/rentals approval (whether or not you get the apartment).  Your credit score is the” silent director” in the play called “your life”. These reasons motivate us to keep our credit scores high or improve them when it’s needed.  

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