Credit Score rules have changed. How does it impact you?

The Fair Isaac Corporation (FICO) changed the rules this Thursday February 5th on how credit scores are calculated. Ironically they are calling the new rules FICO 08 since they were supposed to release them in 2008, but they were late.

Here is a list of some of the changes:

• Problems with the payment history of debts under $100 now have less impact on your credit score.
• Problems with larger debts now have a larger impact on your score.
• Isolated issues with debt will have less impact, as the overall debt picture becomes more important.
• The existing rule, that the smaller the ratio of existing debt to available debt the better your credit, has become more important.

Today’s lending climate has increased the importance of your credit score in the interest rate, options, or even availability of a mortgage. If you have any issues, talk to us sooner in your home search, rather than later. We can put you in touch with some very helpful lenders that can coach you in improving your credit at no charge. Overall improving credit takes time, so the earlier you start, the more impact you can have. The end result of great credit is substantially lower monthly payments on a mortgage.

NewsChannel5 Via Consumerist.

Photo credit, Fortyseven.