Credit scores will be changing at all 3 credit agencies over the course of this year, here is some of what’s known about the change:
-Scores will remain between 300 an 850
-The biggest change is that authorized users will no longer receive credit for being listed on an account. Until this point one of the easiest ways for a teenager to build credit was to be listed as an authorized user on one’s parent’s credit account. This will no longer be possible. However, joint-account holders will still receive credit for the account. You should contact your credit card issuer and see if it is possible to change from being an authorized user to a joint-account holder!
-Joy! Fico ’08 will be much more lenient on people who apply often for credit!
-People who utilize a high percentage of their available credit will be more severely penalized: If your total available credit between all of your accounts is just $5,000, and your monthly statement is $4,500, you will take an even bigger hit on your Fico ’08 credit score than you did previously. If your total available credit between all of your accounts is $75,000, and your monthly statement is $4,500, then you will come out much better with Fico ’08 than you did previously. The lower the utilization percentage is, the higher your credit score will be.
-People with “thin” credit files will be penalized, making it even harder for a teenager to build credit.
-Fico ’08 will be more forgiving of an occasional late payment, but will be much harsher on chronic late payers, or those 90+ days past-due.
-Fico ’08 will reward those with multiple types of accounts, such as revolving and installment accounts.
Unfortunately the authorized user change will throw a monkey-wrench into just about everyone’s credit scores…