The Fair Isaac Corp., the creator of the FICO credit score - recently unveiled a new scoring model for determining credit scores. It is being called FICO 08. The Better Business Bureau of Mississippi offers the following information about FICO 08 and changes it contains can affect consumers.

FICO scores range from 300 to 850, with higher scores being better. They are based on consumer credit history and reveal the risk level on loan defaults. A good credit score is anything higher than 700.

"A low FICO score keep consumers from getting loans to buy a house or car," said Bill Moak of Madison, MS president/CEO of the BBB of Mississippi. "Today, many landlords, utility services and employers are now relying on these scores as well. This means that a bad score can keep someone from getting a good insurance rate, an apartment, or even a job."

According to Fair Isaac, the new FICO 08 is more forgiving of minor slip-ups and will more accurately predict a borrower's risk of defaulting on payment obligations. Factors included in the FICO score are: financial history, indebtedness, length of credit history, and number of open lines of credit. The new FICO 08 changes the weight for these factors.

Scores will still range from 300 to 850 and will take into account the same factors as the old version such as timely payment history, length of credit history, amount of debt, ratio of debt to available credit, type of debt (credit cards good, finance companies not so good), and any excessive amount of recent new credit. There will also be a premium placed on the debt mix; that is a consumer with revolving and installment credit will fare better than one with nothing but (revolving) credit card debt.

Among the big changes FICO is in the area of evaluating "authorized users." An authorized user is one who is not responsible for paying a credit card, but that card's history is reported on the user's credit as well as on the owner's credit. Parents have for years made children authorized users of their cards in order to help them build credit and many spouses derive all of their credit histories from being authorized users of their husband's or wife's card.

"Consumers may see their scores go down if they have multiple delinquent accounts. Their scores may go up if they have only one delinquent account and demonstrate successful repayment on other debts," continued Moak.

Due to the constant increase in Identity Theft, the Better Business Bureau recommends that consumers check their credit report and score periodically to be sure that they accurately reflect their credit record.

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