A study from Fair Isaac confirms that even the best borrowers are seeing their credit lines slashed as banks move to boost profitability during the recession. 16% of Americans have seen their credit lines reduced by an average of $2,200, and of them, 11% had no late payments or negative marks on their credit report.
FICO score isn’t the only credit score game in town. That’s good news for people who have low scores thanks to being an immigrant, divorcee, or don’t have the means to acquire the credit in the first place. It’s one of those quirks of the system. To get credit, you have to have a credit history. To get a credit history, you need to be able to get credit. Thusly, some people find themselves a bit stuck. To meet the needs of these these “thin credit file borrowers”, some alternatives to the standard FICO score are out there. Let’s look at three.
Reader Rebekah has a question about credit cards. She and her husband pay off their cards every month, but like to charge most of their expenses because they enjoy the reward points. She’s wondering if this is a good idea and how it affects her credit.
Fair Isaac says that, in addition to better predicting the behavior of subprime borrowers, the new FICO score will do a better job in assessing new accounts and borrowers who have little or no credit histories, such as young people and immigrants.
Most people can expect their score to rise or fall slightly. — CAREY GREENBERG-BERGER