FICO '08: Your new credit score

Credit rating firm Fair Isaac rolled out its new creditworthiness criteria Thursday, said Ben Popken in The Consumerist, and six new changes will affect your all-important FICO score. FICO ’08 ignores debt of less than $100 that goes to collection, looks at “the total picture more,” docks you for closing accounts, values diversity of debt, rewards unused credit, and lets spouses and children up their score by “piggybacking” on a credit account.

“Despite all these changes, the basic rules for having a good credit score remain the same,” said Herb Weisbaum in Seattle’s KOMO News: Pay your bills on time and keep your credit card balances low. In fact it’s best to keep your card balances at about 30 percent of their limit—that “may sound weird, but it’s just the way things are right now.”

Right now, it’s also harder to get credit unless you have a high FICO score, said Eileen Ambrose in The Baltimore Sun. Two years ago, a score of 680, out of 850, was enough, but to be a good credit risk today, “lenders expect 750 or more.” The quickest way to improve your score is to review your credit reports—available for free at annualcreditreport.com—and correct any errors. (See video for more information.)

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You should check all three reports—from Experian, Equifax, and Transunion—annually, said Jane Kim in The Wall Street Journal, but if you want to see your Experian-based FICO score, you have about a week. Come Feb. 14, Experian will let lenders, but no borrowers, view FICO scores. If the lender only uses Experian, that “could hurt consumers’ ability to shop for a loan.”