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Just when you thought you had your credit score right where you want it to be, changes are planned in the scoring methods, beginning this coming summer. For tens of millions of people, the new scoring method may mean higher numbers. However, for just as many people, scores may go down. FICO (Fair Isaac Corporation), the company whose method is most widely used to calculate your credit score, has announced it will take a closer look at some of your financial transactions, in an effort to determine certain weaknesses.

For those whose scores may go down, this is not good news. Keep in mind that your credit score often determines your eligibility for loans and credit cards, but it also affects premiums for auto and life insurance, dollar amounts for utility deposits and even whether a landlord may decide to rent a property to you.

FICO says it will be looking much more closely at people who do not pay their bills on time especially those who show a recent pattern of falling behind on their bills. The new “10” and “10T” scoring methods are designed to enable lenders to more accurately predict whether consumers will be dependable in repaying their debts. The 10T method enables lenders to efficiently evaluate a consumer’s credit patterns for the past 24 months. Overall, the new methods will give a lender a much more precise view of credit histories.

Although FICO just announced these methods in mid-January, industry experts say that credit scores may increase or decrease by as much as 20 points, which is a significant change. In its announcement, FICO said, “A lender could reduce the number of defaults in its portfolio by as much as ten percent among newly originated bankcards and nine percent among newly originated auto loans.”

It is important for you to keep track of your credit score. You can request a free copy of your credit report from each of three major credit reporting agencies – Equifax, Experian, and TransUnion – once each year at or call toll-free 1-877-322-8228. You’re also entitled to see your credit report within 60 days of being denied credit, or if you are on welfare, unemployed, or your report is inaccurate. Additionally, many banks offer access to your credit report through their websites, if you have an account. Always be aware that the main element creditors look at is your payment history.

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