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Change In Credit Scoring Rules
Late in January of 2009, the Fair Isaacs Company, from which is derived the FICO Score will be changing its scoring rules to help improve consumers’ credit scores. So, exactly how will these changes help? Consumers with late payments on debts of less than 100 dollars will be ignored. Also, the less negative weight will be put on car repossessions and other charge-offs. All active accounts however will have to be in good standing. Finally, and perhaps not so good news, authorized user accounts will now be ignored in the scoring. What are authorized user accounts? Simply this. When anyone with a credit card in good standing requests that someone is added to the card as an authorized user, which means they are not responsible for the debt, the authorized user’s score will not be raised.
In the past parents have added their children as authorized users to help them attain a good credit score. This practice will no longer have any effect on the child’s credit score. Additionally, any open accounts not in use could change a person’s credit score negatively, as banks are shutting down accounts that are not in use.