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Weekly Tips

Small Collection Accounts Ignored by FICO '08

Too many credit scores have been wrecked by something like an annoying $50 medical bill that falls through the insurance cracks and ends up on your credit report before you ever receive a bill. We all know it can happen to the best of us.

Fortunately, Fair Isaac has made an effort to fix this problem by changing its FICO '08 scoring model so it ignores small collection accounts with an original amount less than $100. While this certainly doesn't mean any bill less than $100 should be ignored, it's nice to know responsible credit users won't get seriously dinged for a simple misunderstanding over a small bill.

When applying for a loan, be sure to ask your potential lenders if they are using the new FICO '08 credit score. Even though it was released last year, some lenders still have not chosen to make the switch.

on Sun, 2010-09-19 17:00