There are changes coming in 2019 to the way FICO credit scores are calculated. The new system may allow millions of people to be eligible for loans that they weren’t before. The new system also boosts some people’s credit score. This opens the door to purchasing a home, car, or anything else that needs a loan.
If you are unfamiliar with FICO scores, it is a number that tells lenders how trustworthy you might be as a borrower. Just about every lending organization uses FICO scores to determine your eligibility for car loans, credit cards, and also mortgages. It is calculated by looking at your credit history, including any late payments and how much debt you have.
New Way of Doing Things
According to ABC News’ Chief Business Correspondent Rebecca Jarvis, around 7 million people that are ineligible for loans today may be able to get one under the new system and pay less for the loan. Is your credit score is in the low to mid-600’s? FICO states that the change will be most beneficial to you.
You also apply for a loan the same way as you do now, however, if you are denied, you can request an “Ultra-FICO” score. This new scoring system looks at your savings, checking, and money market accounts. This will help people that are young, don’t use credit cards or who have had debt problems in the past. The new system will also take into account people that have money in the bank and aren’t bouncing checks. You can improve your Ultra-FICO score by keeping over $400 in the bank and have no overdrafts.
There is a soft launch of the new system in January of 2019. A complete roll-out comes by the summer months.
Contact Consumer Credit of the Quad Cities to learn more about improving your FICO score and what the new Ultra-FICO system can do for you.
