The FICO score is the most common credit score used by lenders to determine whether they will extend you credit. FICO is named after its developer, the Fair Isaac Company. In January, there were changes made in order to update the credit scoring model. This new model is called FICO 08 and is now used by TransUnion and Equifax, two of the three major credit bureaus. Experian has not adopted FICO 08 yet, and it is unknown whether they will in the future.

Before we look at the changes that have been made, let’s look at what FICO actually is. Your FICO score is a number that is somewhere between 300 and 850 with the latter being the best possible score you can achieve. This score is based on a number of different aspects when it comes to your credit history and is used to determine the likelihood of the timely payment of your debts.

While the weights of certain factors that affect your score are widely known, the exact formula for determining FICO scores is protected in order to prevent misrepresentation.

One change that was made in FICO 08 was to help decrease the effect of one or two late payments from an otherwise responsible person that has a history of good credit. Minor delinquencies that total less than $100 will not affect credit scores any longer, nor will single delinquencies that are older than two years.

Credit utilization has always been taken into consideration. This is the relationship between your credit limit and the actual amount of credit used. Using more than 30% of your total credit limit has always had a negative impact on your credit score, but with FICO 08 changes, this will have an even bigger impact.

Changes have also been made to prevent “piggybacking” of one debtor on another individual’s credit. For example, someone who had a bad credit score might have thought, “I can just attach my name to my mom’s credit card to help raise my credit score.” The thought was that Mom’s good credit would help raise her child’s credit. However, under FICO 08 changes, credit will no longer be assigned to multiple parties authorized to use one card.

For the most part, the changes that came with FICO 08 are good. If you are a responsible spender and have good credit, it will only do good things for you.

By: Buttom Bunner

About the Author:

Beulah

If you live in the United States, you can’t turn on the television without seeing some guy in a pirate hat singing about how his life would have been better if only he had a free copy of his credit report.

The problem is, the web site he’s promoting has a different definition of free, as do most of the other web sites that come up when you run a search for Free Credit Report.

If your definition of free is: “without cost or obligation,” this article is for you.

Best Place to Get Your Free Credit Report

The U.S. Federal Trade Commission, which is the USA’s top consumer protection agency, requires the nation’s three major credit bureaus to provide an up-to-date copy of every consumer’s credit report once per year.

Those three agencies, Equifax, Experian, and TransUnion, provide access to this required service at a website called AnnualCreditReport. Don’t confuse this site with the one called FreeCreditReport unless you want to meet the friends of that singing pirate. When you get your free credit reports from AnnualCreditReport, their definition of free will match yours.

Now the law does not require these credit bureaus to give you your credit score for free, so each one will pitch you to buy access to it for a few dollars. Don’t do it. I’ll show you where to get your free credit score in just a moment.

Free Credit Report Strategy

Since you get access to your free credit report from three credit bureaus, and you can bet that all three are going to be essentially duplicates of each other, don’t get them all at once.

Instead, get one now, another in 3-4 months, and the final one few months after that. This way you can see if your credit has changed over those periods rather than getting them all at once and having to wait a another year to check them again.

Another Free Credit Report Strategy

In addition to spreading your free credit reports out over twelve months, it’s nice to have the option to get yet another one so you can spot-check your credit before you make a major purchase like buying a home or a new car. Here’s how you do that.

Quizzle.com offers a free credit report, every six months, that also matches your definition of free. You do have to join the site, but that’s as simple as filling out the form and providing your information. No credit card is required because Quizzle isn’t trying to sell you anything.

Once you log in, you have access to a wealth of credit management tools, a credit management blog, articles, tips and tricks, and more.

And the best part is, this independently-owned company provides access to your free credit report straight from Experian. Don’t worry about SPAM. Quizzle never mails you anything you don’t give them permission to mail, and you can withdraw that permission with a click of your mouse.

Here’s Your Free Credit Score

You remember that credit score Experian wanted to sell you when you accessed them through AnnualCreditReport? Well, you get that very same credit score inside of your Quizzle control panel for free.

Not All Credit Scores Are Alike

Your Experian score is very likely going to be different than your FICO score because Experian uses something called the CE score. The two other credit bureaus use the FICO score.

There are many lenders that use the FICO score when making credit-granting decisions, but there are a growing number who are switching to the CE score.

Knowing that, you might as well grab a free copy of your FICO score as well. TransUnion wanted to charge you for that when you reached them through AnnualCreditReport.com, but the company is just as happy to give it to you for free, if you reach them through CreditKarma.com.

CreditKarma is owned by TransUnion. They don’t offer a free credit report, but they do provide your free FICO score. And you can get an updated look at the score every day of the year if you want to. Just click the ‘Update My Score’ button inside the control panel. Your FICO score changes as your credit situation changes, so it’s worth checking from time to time.

CreditKarma monetizes the site by showing you credit-based offers when you log in. These offers are easy to ignore and there is no obligation to click on any. If you do find an offer that interests you, just click and read. Nothing happens automatically, and there is no obligation to accept the offer once you read it. Don’t worry; CreditKarma never mails you anything unless you ask for it.

There’s No Hit To Your Credit Score

Having excessive inquiries on your credit report can impact your CE and FICO score, but that isn’t a concern if you use AnnualCreditReport.com, Quizzle.com, or CreditKarma.com.

Inquires made through these resources are not seen by anyone but you, and they have no impact on your credit score.

So the next time some pirate tries to get you to buy your free credit report, just change the channel.

By: Lisa Dozois

About the Author:

Angel