FICO's New Credit Score Model Could Impact Over 100 Million Americans
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FICO's New Credit Score Model Could Impact Over 100 Million Americans

According to Forbes, the new FICO 10 model will be put into place this summer. The Fair Issac Corporation (FICO) announced it will be changing its model to include consumer’s account balances and missed payments over the last two years.

The FICO specializes in predictive analytics which analyzes a range of credit information and allows lenders to predict a consumer’s financial behavior. Under the new credit model, Forbes predicts 110 million Americans could see a change in their credit score with about 40 million seeing a 20 point drop in their credit score.

Unlike previous models, the FICO 10 model will put a heavy emphasis on past delinquencies and late payments from the last two years. Forbes also reports consumers with a high utilization ratio (credit used vs. credit available) will also see a drop in their credit score.

Although FICO changes will soon be in effect, here are some ways to continue to manage your credit under the new FICO 10 model.

Be Aware of Your Credit Score

Knowing and checking your credit score regularly is important because it will allow you to see whats positively or negatively impacting your score.

Pay Your Credit Card Balance Before Monthly Bill Due

Seeing as though the new FICO 10 model puts a heavy emphasis on utilization ratios, paying down your credit card debt before each billing cycle may be advantageous.

Pay Your Mortgage Payments on Time

Paying your mortgage when it’s due will now have a more positive impact on your score.

“Your history of paying your mortgage on time will have a larger role in your FICO score than it previously had,” Rylie Hendren, capital markets data scientist at online mortgage lender Better.com, told Forbes. “If you missed payments in the last two years, the new version of FICO score will cause your score to decrease more significantly than it would have in the previous version.”