Credit Scores

Changes to the Fair Isaac Credit Report scoring system are going to occur shortly. Individuals need to know the ins and outs of the new system to better prepare for when the changes take effect. There will be some new benefits for consumers, but until the system is in place, no one can gauge the potentially negative impact on your credit report.

New FICO Scoring System More Accurate

Initially, the three credit bureaus balked at the revisions proposed by FICO. After some negotiation, everyone is on the same and FICO says the new score will be more accurate in predicting defaults than the classic scoring system. Experts consider your FICO score the measurement of your financial health.

New Changes to the FICO Scoring System in 2009

The new formula ignores small collection accounts (amounts under $100). If a collection is sent in for a small amount it doesnt negatively impact your score. Although the amount should be paid, if a person lost track of a small bill, points will not be shaved from their score. Additionally, this scoring system is a bit more forgiving of serious credit setbacks. Some other changes include:

• *Effects of authorized-user accounts on credit scores have been reduced, but not eliminated
• *Higher penalties for late payment
• *Higher rewards for prompt payment
• *Different debt will be scored differently

New FICO Scores Determined By New Criteria

With credit becoming increasingly difficult to secure, it is important for consumers to know all the facts. FICO scores will still be determined by the following criteria:

• *Payment History 35%
• *Types of Credit Used 30%
• *Amounts Owed 15%
• *Length of Credit History 10%
• *New Credit 10%

Individuals are encouraged to pay their bills on time, avoid too many inquiries into their account, and maintain low debt balances in general. Consumers should make sure to watch their credit carefully so they are aware of how the changes affect them. Check your credit score today for free from our trusted partner, Go Free Credit.

Say you are usually quite good at balancing the payments of your credit card with your paycheck. However, the holidays created a big gap between the two and now you are fearful that there is too much debt out there in too many places for you to manage all your balances properly. A balance transfer credit card with a low introductory offer is just the tool you may need to help better manage your budget.

Balance transfer credit cards are a great way for consumers to consolidate all their credit card debt onto one card. If you have a good to excellent credit score, you may even be able to take advantage of a low or 0% APR introductory offer and help you not only save money on a reduced credit card interest rate but also make it easier to manage the consolidated payment as one payment date is easier to track then a multitude spread out on a variety of cards.

If you are qualified enough to secure a low APR balance transfer card, then minding your new payment schedule carefully and not accruing new debt can help you make great progress made on paying down your debt. However, balance transfer cards with low promotional rates do not offer a permanent solution to loan consolidation. After a period of several months to a year (depending on the loan offer you are taking advantage of) the interest rates can jump and you can get hit with some significant amounts of new debt.

But by securing a low rate balance transfer card, consumers can get the upper hand on their finances at it is basically like getting a good line of credit for free. The credit card company is lending you money so you can get your debts organized and in order. Just make sure to track everything carefully - so pay your debts on time and be aware of the expiration date on the initial transfer amount.

You're short on cash and you need to make a large purchase, but you have a good credit score? Then a no interest credit card may be a great tool for purchasing what you need without having to wait, just make sure to read the fine print when signing up for one.

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