FICO 08 Does Away With Piggy Backing

I found this entertaining video about credit scores on Colleen Kulikowski's Celebration Blog. It reminded me that the Fair Isaac Corporation will role out new rules dubbed FICO 08 in the next few months. The new rules are supposedly going to help lenders reduce defaults by 5% to 15%. It will go easier on consumers who make occasional slip ups and more penalizing to those with multiple offenses. The scores will still range from 30o to 850 and take into account traditional factors such as timely credit history, length of credit history, types of debt, debt mix, and any excessive amount of recent new credit. Among the biggest changes in the way FICO scores are calculated will be the way it factors in "authorized users". An "authorized user" is one who is not responsible for paying back the credit card debt, but the card history appears on the user's credit as well as the owner's credit. Parents have been helping their kids build up credit for years by making them authorized users. I'd have to say I benefited from this one in my formative years. Spouses have also commonly utilized this tactic for improved credit scores. This form of credit improvement is commonly referred to as "piggy backing" and will not be allowed in the new guidelines for credit scores. If you're curious about how your credit score will be effected by the new guidelines, I suggest checking your credit for free at annualcreditreport.com after the new rules go into affect. We're all entitled to receive one free credit report per year and all three credit agencies make the score available at this handy site. Best of all, it's totally free. Gotta love it. related link: Build a Killer Credit Score in 2008