The FICO credit score formula that is used by lenders to determine your "credit worthiness" will soon be changing. The higher your FICO score, the more likely you are to get a better deal on a mortgage, auto loan and even a cell phone contract. But with the new changes, your credit score could change significantly.Fair Isaac, the company that pioneered the FICO score, says the new scoring system will be more accurate than the original system, but until the system is in place it's difficult to tell if the impact on your credit score will be negative or positive.
Some of the proposed changes to the FICO scoring system include:
* Stronger penalties for late payments.
* Better rewards for prompt payment.
* Different types of debt will be scored differently.
With credit becoming increasingly difficult to secure, it's more important than ever that you know all the facts surrounding your credit report. FICO credit scores are approximately determined by the following criteria:
* Payment history -- 35 percent
* Types of credit used -- 30 percent
* Amounts owed -- 15 percent
* Length of credit history -- 10 percent
* New credit -- 10 percent
See how changes to the FICO scoring system might increase your score. Check your updated credit score for free today at GoFreeCredit.com, a Better Business Bureau accredited service. Checking your own credit does not hurt your score. Copyright ©, ARAnet, Inc.
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