Small Delinquencies are Overlooked in Calculating Your FICO ’08 Credit Score
With the newest version of the FICO credit scoring system, minor delinquencies are now overlooked in calculating creditworthiness.
Under the updated scoring model, called FICO ’08, small missed payments lingering in collections with original amounts of $100 or less will no longer do damage to your credit score.
If your “Credit History” is otherwise unblemished, you are less likely to be penalized for any single delinquency if it occurred two or more years ago, says FICO which developed the FICO scoring system.
There’s more flexibility with missing a payment — if you have a more habitual pattern of paying accounts late, you’re more likely to get penalized for that.
If your credit usage is high, that will be more likely to hurt your credit score with FICO ’08 but getting close to your credit card limits, even if you always pay on time, is penalized in some way in every FICO Score.
The new system has been available at all three credit bureaus — Experian, TransUnion and Equifax — the changes were made to provide lenders with a better risk assessment of borrowers.