Jacksonville, FL - More than half of the people in the US are about to see their credit score go up or down about 20 points this summer, according to WOKV's Consumer Warrior Clark Howard.
Howard says the credit score changes will be a result of FICO (Fair Isaac Corporation) changing the way it calculates credit scores to include a look into your credit history for the previous two years, instead of a current snapshot.
Howard says these changes come as we're in an odd place with how people handle money right now.
"There's been a split where there are many people that are having no sweat with handling their bills and a very large number of people that are having a very difficult time. This split is so significant that it's led FICO, the people who do the scoring models, to change how they treat you in calculating your score," explains Howard.
To help prepare, Howard is laying out what will cause you major problems under the new system.
"Under the new FICO scoring model that will phase in over time this year and next year, if you have gotten into more difficulty with debt and carrying more levels of debt recently, that will pound you on your score. If you have taken out personal loans to deal with credit card debt, that will really eat you up," says Howard.
The vice president of product management at FICO, Dave Shellenberger, says installment debt like student loans or big mortgages would not ding a customer. Additionally, Shellenberger says people who make on-time payments and don't carry high balances will likely see a slight increase in their score.
Howard says now is the time to tackle your debt.
"You got to know that if you're at a point where your debt is controlling you, instead of you controlling it, that's not good. And the scoring models will make it even harder for you," says Howard.
But he says there are resources to help.
"Before you get in over your head, we have wonderful offices here of the National Foundation for Credit Counseling at NFCC.org, go talk with them," Howard recommends.
Get more money-saving advice from Clark in his latest on-demand podcasts, by clicking HERE.
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February 04, 2020 at 05:00AM
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WOKV's Consumer Warrior Clark Howard breaks down upcoming FICO credit score changes - WOKV
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