When it comes to borrowing money, your FICO score can make or break your chances. And the analytics giant is changing the way it calculates that score.
The FICO Score is the independent standard measure of consumer credit risk used by lenders in more than 90 percent of all consumer credit decisions in the U.S., and is provided free to consumers through hundreds of lenders via the FICO Score Open Access Program. Many of the largest credit card issuers and largest auto lenders, and tens of thousands of other businesses rely on the FICO Score for their consumer credit risk analysis and federal regulatory compliance, according to a FICO news release.
The FICO Score 10 Suite to be introduced this summer uses “trended data” on account balances and payment activity on loans and credit cards gathered over the past 2 years. Steady payment of the debt can help your 10 T score.
According to Kiplinger’s Personal Finance, other things you can do to help your score include:
- Paying the full balance of your card each month.
- Pay the minimum amount for a period of time, then increase your monthly payments.
One of the positive aspects of the change is that even if you have an increasing balance on your credit cards during these uncertain times, if your score was already above average, it might get even healthier providing you continue to make timely payments.
“Many lenders want to leverage the most comprehensive data possible to make precise lending decisions,” said Jim Wehmann, executive vice president for Scores at FICO. “By offering a score that taps further into trended data, we’re able to give lenders greater flexibility and predictive power, as well as ease of integration.”