Credit Scores – two words that could determine your fate in terms of getting that home loan or credit card. Not a lot of people know that credit scores are a large part of the reason how interest rates are calculated – or whether it is even possible for you to secure that loan or card you are applying for. Safe to say that if you want that approval, better credit scores are necessary.
It has been reported recently that there will be a huge change that’s going to happen very soon. The new FICO 10 Score model will drop this summer and it will for sure, create an impact on so many people, particularly borrowers. If you have an outstanding credit card debt or balance, you may probably need to ready yourself for the change that’s coming – or that credit score drop.
So first and foremost, what is the FICO model?
The FICO scoring is created by the Fair Isaac Corporation. It is a system that is utilized to assess borrowers’ credit risks as well as the payment history, the length of credit history, credit cards used, and more. In the past, it was named after the very organization that created it, but in 2009, it was changed into just FICO.
The range of scores in the FICO model is from 300 to 800, and you will know if you have a very good credit card history if you scored 650 above. Banks and lenders use the FICO model to make decisions regarding loans or credit.
How is the new FICO 10 scoring model going to affect consumers?
The new FICO 10 score is technically a redevelopment from the company since 2014. The new version has quite a few differences from the previous model that is important for borrowers to know and fully understand. Here are some of those things to know.
- The FICO 10 scoring will still use the five main factors to assess such as payment history, the amount owed, how old the credit history is, new credit mix, and new accounts. However, the assessment performed on the credit risk will be more precise by considering the trended data. The trended data is also called the time-series data or the report that shows how you actually managed the credit in the last 24 months. This allows you to a more detailed image of your financial situation at that time.
- Remember when we said earlier that if you have outstanding credit balances, it might affect your credit score? That is because, in the new FICO 10 score, delinquencies will hurt borrowers more than the previous model. Consumers who miss payments are set to experience a more intense credit score drop, and the only way to improve your standing is if you only make payments on time. Otherwise, you are just going to have to deal with it.
- It’s not all negative with the new FICO 10 scoring. Consumers that are in good credit standing will most likely enjoy an even higher score with the new version. Those with excellent credit scores will easily be qualified for perks such as rewards cards. Again, these people have credit scores with 650 above. What can you do to be able to maintain a good credit score? You have to pay bills on time, try your very best to maintain low credit balances, and pay bills in full. Good credit history is key to make sure that the new model wouldn’t hit you. Oh, also avoid opening too many accounts all at once and explore the prequalification tools if you want to shop around.
- In the previous FICO versions, personal loans are allowed without the fear of lowered FICO scores. Unfortunately, the new FICO 10 scoring will have a bigger effect on personal loans otherwise known as signature or installment loans. Most of the time, a personal loan is used to pay off any high rate credit card debt so you have a fixed rate and a fixed monthly payment. This process is called debt consolidation and it has been approved as a smart strategy. However, if you are paying off both the loan and debt consolidation, your credit score will mostly be affected.
How to get a Personal loan
At Greater Alliance, we offer low personal loan rates, and the only fee we charge is a late fee. We also offer excellent customer service and faster approval than other, bigger financial institutions.
We have several loan options to fit your need:
- Fixed Personal Loans allow you to borrow up to $30,000 for 48 months at 10.24% APR. We even have an option for you to skip a payment if needed. Learn more.
- Fast Cash Loans get your money fast without needing a credit check.
- Shared Secure Loans allow you to borrow against your Greater Alliance savings account at a great low rate.
- Certificate Secured Loans are like a Shared Secure Loan, except that you borrow against your Certificate Deposit (CD).
When you are searching for a personal loan lender, consider Greater Alliance. We’ll help you dream big or give you peace of mind to pay a big expense. Use our loan calculator to see how much you can afford and then contact us or call 201-599-5500 or email us at firstname.lastname@example.org.