Having a healthy FICO score is important to your financial well-being. Therefore, it’s important to understand how your FICO score is calculated and also to stay up to date on any changes that occur. On this episode we discuss some recent changes to the FICO score and why these changes are good for your score.
FICO Score Basic
Credit Score ranges between 300-850
Credit score rankings:
300-620 - Bad
620-660 - Fair
660-720 - Good
720-850 - Excellent
How credit score is weighted:
35% - Payment History
30% - Amount Owed
15% - Length of Credit History
10% - New Credit
10% - Credit Mix - Types of credit
FICO Score Change Updates
Medical debt not part of the equation anymore.
Other items such as, library fines and traffic tickets will no longer be on your report.
Tax liens and civil judgements have been removed from reports and will no longer impact your score.
Old consumer debt that’s paid off remains on your record but will not count against your score.
Creditworthiness of people who haven’t borrowed in the past (no extensive credit use record) will be more favorable.
Consumer debt that’s not paid in full will negatively impact your score. The more you pay off the balance the better your score.
Remember you can also freeze your credit report for free now. Learn more from episode 53 “Credit Freeze - A Great Way to Keep Your Identity Safe”