By being able to better judge applicants with past due issues and insufficient information in their credit reports, FICO is taking steps to insure that these consumers will get a better opportunity to obtain credit – a situation that’s particularly relevant to car buyers with poor credit.
The newest FICO scoring model will now reward consumers that pay their collection accounts with a higher score. But while it may take time to be implemented; consumers with poor credit should get a head start by beginning the process of paying off their collection accounts, if for no other reason that it is one of the fundamentals of good credit.
Both discrepancies and differences in data can cause consumer’s credit scores to differ from credit bureau to credit bureau. According to FICO, FICO Score 9 should make the credit scores among bureaus more consistent.
The newest FICO score will help borrowers with problem credit in at least three ways. For one, it will lower the impact of
unpaid medical collection accounts. Secondly, it will ignore collection accounts that have been paid. Finally, it will more
accurately assess consumers with limited credit and checkered payment histories.
The latest program from both Hyundai and Kia is certainly a step in the right direction by offering free, updated FICO scores to borrowers. Unfortunately for most credit-challenged car buyers, not only is its focus too narrow, what’s left unsaid is the minimum credit score or profile required to qualify for it.
The third quarter 2013 auto loan delinquency rate has officially been released by TransUnion, which shows an increase in balances and number of financing opportunities to subprime borrowers.
Credit scores are a complicated but important part of our adult life, and it’s likely that there is more that goes into determining those scores than you think. If you’re not careful you could harm yourself in more ways than you’re aware of.