Hi Desert Real Estate Forum

Set to debut this year, FICO ’08 is the latest model for scoring lending risk from Fair Isaac, the industry‘s leading credit-rating firm. Experts are predicting that FICO ’08 could reduce default rates between 5 percent and 15 percent.

Here’s what to expect:

• The new scoring system will go easier on consumers with one credit misstep and harder on those with multiple credit dings.
   
• Authorized Users (AUs) are people with credit cards who are approved to make purchases but are not responsible for paying the balances. (A student authorized to use a parent’s credit card is an example of an AU.) Under current FICO scoring, the history of the credit card performance is reported on the AU’s credit record, thus influencing the score. But with FICO ’08, credit cards for which people have AU status will no longer influence their credit score. Therefore, AUs might consider changing their status on existing credit accounts from AU to Joint, or opening an account of their own to build their credit score.
   
• High credit balances will deduct more points under the new system. More than ever, it’s important to lower balances on revolving credit accounts.
   
• The new system will look favorably on consumers with various types of debt. For example, people with revolving and installment credit will fare better than those with nothing but revolving credit card debt.
   
• FICO scoring will still range from 300 to 850. Customers can get a free credit report at annualcreditreport.com.

For more information, visit fairisaac.com.