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FICO’s new policy might impact your credit score

About 110 million people will see a change in their credit

FICO will begin incorporating the consumer’s debt levels into their credit scores.

The more debt you carry, the more you will be penalized for a late payment.

FICO estimates 110 million people will see a change in their credit score after this policy is enacted.

According to MarketWatch:

“The changes FICO has made to its credit-scoring model could mean a bigger gap between consumers with good credit and those with poor credit. People who already have high FICO scores will likely get an even better credit score under the new system, and people who struggle to pay lenders on time will see more significant declines in their scores than under previous versions of FICO, the Wall Street Journal reported.”

You’ll need a Wall Street Journal subscription to read that report, which is always annoying if you don’t have one. But CNBC explains it this way: “FICO estimates that about 110 million consumers will see a change of less than 20 points to their score under the new credit score model" and that "roughly 80 million consumers will see a change in score of 20 or more points in either direction, upward or downward, FICO says.”

What should you do?

Experts say it may take a while for the new changes to be noticeable. Meanwhile, financial experts reiterate the importance of paying credit bills on time and trying to keep your debts as low as possible.

According to a Washington Post report, this new model will “help reduce defaults, including a potential 9 percent reduction among new auto loans, Fair Isaac said.”

“New scores, for example, could factor in consumers’ checking and savings account balances over two years rather than just a couple of months. That will give lenders more insight into how people are managing their credit, Fair Isaac said." -- per the Washington Post.


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