The lending industry looks to the Fair Isaac credit scoring system to determine the strength or weakness of potential borrowers. The system periodically undergoes some changes to deal with the evolving economic system.
Fair Isaac & Company introduced FICO 8 with the hope that it will help lenders better evaluate the risks of a potential borrower. The recent escalation of foreclosures in the real estate market has required the FICO to be adjusted to better determine the likelihood of default.
Fair Isaac & Company constantly adjusts the formula for determining credit scores. The changes in the FICO 8 system reflect the current troubles in the mortgage industry. Even with these adjustments and changes, the steps borrowers take should not change. Here is some advice about how FICO 8 may impact you.
Consumers should always keep an eye on personal credit scores. The changes represented in the FICO 8 will not have any real effect on borrowers that are taking all of the steps and precautions to keep their credit histories clean. Make payments on time, avoid reaching borrowing limits (on credit cards and other revolving credit lines) and limit the amount of new credit taken.
The FICO may change, but the tips for keeping a strong credit score remain the same.