We will have a new credit scoring formula

We have to be aware about our credit score if we are looking for a home loan or some general purpose loan from a bank. Most of the time we don’t look satisfied with the credit score we have and have been complaining that the credit scores are unfair. But now the companies that calculate our credit score are doing something about it.

Many of us will have some or at least one late credit card payment and we would also have a genuine reason for this delay most of the time. "If I was late, it was just because I misplaced a statement," said card use Scott Shultz.

But now days, we people have been using credit cards just to get by. With rise in credit card debt, late payments are sure to happen sometime at least. Now FICO (Fair Isaac Company) that calculates the credit score is trying to get a credit score that exactly shows what is happening to an individual life.

Fico the credit calculating company has a secret formula that gives the credit score in the range from 300 the worst credit score and 850 the best credit score to determine person credit worthiness. According to John Gilligan, consumer credit counselor, diversity is good for consumers. "They like to see people have a mortgage, car payments, a credit card maybe...maybe two," he said.

With current scoring system, even one late payment could cause us loss of 100 points. But the new credit scoring formula will be more forgiving but will not be helpful for guys whoa re always late in their credit card payments.

"If you're delinquent on 2 or 3 of those items they will probably reduce your credit score more than they have in the past," Gilligan said.

Currently Fico credit score is just by 90 percent of Banks here in US. The new credit scoring formula will be in effect from this spring.

Via Link: 13wham.com