Features that make FICO 8 “a more predictive score” than prior versions.
FICO 8 is the most commonly used version of the FICO model. Like previous versions, it takes on-time payments, account balances, and other credit history into account when calculating your score. Scores tend to be higher for those who pay their bills on time, keep low credit card balances, and only open new accounts for targeted purchases.
Lower scores are attributed to those who are frequently delinquent over-leveraged, or frivolous in credit decisions. It also completely ignores collection accounts in which the original balance is less than $100.00
The additions to FICO 8 include increased sensitivity to highly utilized credit cards. This means that low credit card balances on active cards can more positively influence a borrower’s score. The score also treats isolated late payments more judiciously than past versions, so FICO 8 can be forgiving if your that late payment last year was a one-off occurrence, and all your other accounts are in good standing.
FICO 8 also divides consumers into more categories to provide a better statistical representation of risk. The primary purpose of this change was to keep borrowers with little or no credit history from being graded on the same curve as those with robust credit histories.
One of the most important aspects about FICO 8 is that it’s more sensitive to high utilization of credit lines when compared to previous versions of FICO. We recommend that you stay under 30% credit utilization to keep your FICO 8 score from dropping due to high utilization.
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