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Changes to the credit scoring system

Posted by Jill Boynton  October 14, 2009 10:54 AM

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This year Fair Isaac Corp introduced some changes to its FICO scoring system. This is nothing new - changes to the system occur periodically, the last having taken place in 2004. The goal is to stay on top of evolving credit risks and improve reliability as a predictor of borrower defaults. How will these changes impact your credit score?

One significant change is that fewer points will be deducted for occasional credit transgressions - a rare missed payment of less than $100 - and more for chronic late-payers. Also it will stop the practice of allowing authorized users to benefit from the card holder's payment history. This is a popular strategy used by consumers with poor or no credit history to improve their scores.

FICO 08 also places greater weight on using a mix of credit - using both revolving and installment loans will increase your score relative to someone who uses only one type of credit.

The new system was rolled out early this year, but lenders can take their time adopting it. Therefore it probably won't impact your credit score for 12-18 months. It is estimated that scores will be 5 to 15 percent more predictive of credit risk when it is fully adopted. Most consumers won't see a significant change to their score.

The best thing that you can do to raise or keep your credit score high is to keep your debt level low and make your payments on time.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

About the contributors

D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of, a credit card and gift card marketplace, and, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

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