Your FICO score is what the Banks use to determine your credit worthiness for loans such as a mortgage. Fair Isaac Corporation (FICO) announced it will give less weight to unpaid debt as long as the debt has been paid. This will mean that more people will qualify for mortgages and be able to obtain better interest rates on mortgages…saving thousands of dollars. From the National Association of REALTORs:
“Realtors® welcome today’s announcement from Fair Isaac Corp., or FICO, that it will no longer penalize borrowers for certain debt-collection activities when calculating credit scores. “This move will ultimately make a real difference in the lives of millions of Americans, who have been shut out of the housing market or forced to pay higher mortgage interest rates because of flawed credit scores. Since the housing crash, overly restrictive lending has been the greatest obstacle to homeownership.
FICO calculates your score as a three-digit number between 300 and 850