Changes You Should Know About - Credit Scores
A new process in the system called 'Credit Scoring' has arrived. In general there will be more negative importance placed on carrying credit balances near the credit limit. But in a positive step, some events such as small collections accounts that weighed heavily in the past will be treated differently.

FICO 08, is a new version of the FICO scoring model. Fair Isaac, the creator of the FICO (see all about Credit Scores)  score competes for credit reporting services with the nation's three main credit bureaus, TransUnion, Equifax and Experian. Fair Isaac says the new process will help to forecast the chances of a default better than in the old model. 

When consumers apply for credit of almost any type, a report is pulled from the credit bureaus and/or the FICO service. The changes are more sensitive (bad) for consumers who are close to 'maxing out' their credit accounts. As credit providers lower the borrowing limit, the percentage of unused credit drops. ( Coverage on the fallout of this practice)  One tip to consider is load balancing all your balances. It is suggested to try and keep all balances owed near 30% of available credit. 

Two positive changes: Small Accounts that are reported as Derogatory on your credit report such as library fines or unpaid parking tickets can weigh heavily on your score. For owed balances under $100 there should be no reporting consequences. 

Big credit 'Ding' For consumers who have had an isolated setback such as a job loss causing a charge off, the negative aspects are now going to be weighed less as long as all accounts are current. For every month there is no bad news, the effects of a negative event are lessened. 

Other tips to help protect your scores: Never Close A Credit Account. Credit experts say that closing an account with a '0' balance may be a negative since it alters your total Debt to Credit ratio. 

Keep your accounts active. Even if your balance is '0' charge something if you can and pay it off promptly. Don't forget that you have the balance as a late payment can do massive harm to your scores, as well as a $40 late fee.