FICO will have new standards in 2019. It will include your bank activity in your credit score. This can cause your credit score to increase.
The Fair Issac Corp is the company that created the FICO score. In the past, they used payment history, length of credit history, debt and credit mix to determine credit score. In 2019, they will be considering one’s ability to manage checking, savings and money market accounts.
Financial experts believe that more people will have access to credit cards and loans when this new scoring model is released. Lenders will be able to get a better idea of how well you manage your finances. This in turn will increase approval odds.
Credit reports are a lot like the report cards that you used to get in the past. They look at how well you have done in various financial areas in your life. Lenders look at these various areas in order to determine how likely you are to repay a loan or credit card.
FICO believes that the people who will benefit the most from this new credit scoring system will be people who have scores in the 500s and 600s. It will also benefit people who have a limited credit history. Furthermore, it will benefit people who are in financial distress.
FICO scores range from 300 to 850. People who have high credit scores are able to get credit cards and loans with low interest rates. The average FICO score is 704. This is 15 points higher than the average FICO score was one decade ago. The recession played a role in low credit scores.
If you are hoping that this new scoring system will improve your credit score, then you will have to pay close attention to how you are managing your accounts.