An individual’s credit score has always been a key determinant of his/her ability to get credit. It is also a primary factor affecting the interest rate you are offered on any loan or credit card, which is why a good credit score is a major advantage when you apply for a loan/card. It is therefore important that you take a few measures to improve your credit score:
- Keep your credit card balances down
- Avoid overuse of credit cards
- Sort out late payments
- Pay-off collection accounts
- Manage your credit cards prudently and make regular payments
- Opt for credit card refinancing/balance transfer for multiple credit card debts
While these are the general rules of thumb to build a good credit history, the coming year is set to bring in an all-new standard for credit scoring, which will redefine the way credit scores are determined.
FICO’s New Credit Scoring System
Fair Isaac Corp, the creator of FICO credit score has been taking into account an individual’s credit and payment history, and debt and credit mix to determine the credit score. But this is about to change from 2019. According to a report by The Wall Street Journal, FICO plans to roll out a new scoring system in 2019, called the UltraFICO Score, which would consider how consumers manage cash in their checking, money-market, and savings accounts. This means that the very core of most consumer-lending decisions is about to undergo one of its biggest shifts in 2019.
What does the UltraFICO Score mean to consumers?
This new standard of scoring is set to boost consumers’ credit scores. This would help more consumers get approved for loans, as it takes into account how consumers manage the cash in their accounts, thus serving as an important indicator of how likely they are to repay their debts. According to FICO, about 7 million applicants who have low credit scores because of limited borrowing histories will see their scores improve under the new system of scoring.
So, how can you improve your credit score in 2019 under the new scoring system?
Pay attention to how you manage your accounts. While you still have to be careful while using your cards and should pay off your debts and credit card balances on time, you also have to make sure your bank accounts are managed well, because your banking activity will be analyzed to determine your score. According to FICO, this means that if you have had a good amount of money in your accounts for a while, and have been transacting frequently without overdrawing on your account, your credit score is sure to see a boost in the coming year!
So get set to pump up your credit score in 2019. Wish to pay off multiple credit card balances? Check your rates with Lendvious for the best offers on credit card refinancing loans from top lenders.