FICO made a recent announcement that could affect your credit score. If you are looking into buying used cars, this is important information to know, especially if you are concerned about your credit score.
FICO has developed a new version of the FICO score, which will be calculated based on a new model.
In previous models, the score was created based on an individual’s payment history. This new model will all take into account any debt levels and personal loans. Instead of taking snippets of personal payment history, it will take in a historical view of payments over time. This includes what an individual’s account balances have looked like over the past two years.
This new model gives lenders the bigger picture. It gives them a better idea of how individuals manage their credit. Lenders can play a big role in purchasing used cars. If you understand the new FICO score model, you can be better prepared to increase your credit score.
This new announcement could be good news or bad news depending on your current score and payment history. Dave Shellenberger, the vice president of product management at FISCO, predicts that around 80 million people will see a significant shift in their current score. Those who have high credit card debt or who have missed recent payments are likely to see a drop. On the other hand, those who make regular, on-time payments and who don’t carry high balances will likely see an increase.
All in all, the principles haven’t changed.
Timely payments and low credit card balances remain foundational to a healthy credit score. The difference is that the new model looks deeper into your history. These new changes will go into effect this summer.
Your credit score can be one of the most challenging obstacles when purchasing a new vehicle. At Automatic Car Credit, our team does more than sell used cars. We are financial leaders who care about our customers. We will work with you to help you reestablish your credit. You can get approved within seconds! Visit our website to learn more.