Consumers, including those who may be applying for new mortgages or refinances, might be in for a big surprise this summer.
Fair Issac Corporation, the company which creates the FICO credit score models, will introduce two new ones this summer, the FICO Score 10, and the FICO Score 10-T.
The information collected will include account balances going back two years or more. It also means that delinquencies and defaults will continue to impact score for a longer time, and might help lenders determine if consumers are trying to reduce their debt.
Interesting to note, is the fact that the new scores will also weigh any personal loans more heavily that might penalize people who use them to pay off debts, then go back to use more credit from those paid off.
They also indicate that up to 40 million Americicans coult see their score drop due to these changes. Others who already have high score, may see them increase. Only time will tell the true affect that these changes will make.
People should make themselves aware of these changes, and at least pay more attention to their spending habits.
For a detailed explaination of these changes, please refer to the link below from Mortgage News Daily who announced these changes on Friday.
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