FICO has released a new credit scoring model referred to as "FICO 08" that will impact credit scores.
The new scoring model addresses the following issues:
- Less sensitivity to small (less than $100) missed payments that slip into collections.
- Increased sensitivity to total credit card debt and proximity to total credit limit.
- Identify "piggybacking" and eliminate the score enhancing effect.
Concerning the last point, "piggybacking" was a tool used by credit repair companies to increase credit scores. The process involved paying people with high credit scores to list people with low credit scores as being approved to use their account.
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