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Anchor Intro: If you borrow money, you probably know that your credit score is
important. The company behind credit scoring, Fair Isaac, recently announced changes in the way they'll soon be
calculating your score. Bankrate.com reports on what the new methods mean to you.
Voice over 1: Whether you're looking for a house to buy, a place to work or even the best
deal on car insurance, your credit score can make a difference.
Voice over 2: Because lenders, employers and insurance companies might look at it to determine
what kind of risk you are.
Voice over 3: While the exact formula behind your score is secret, according to the company that
does them, Fair Isaac, about 65 percent of your score is based on how much you owe and how well you've done paying it back.
The other 35 percent is split between the length of your history, the types of credit you've had and new credit and inquiries.
Voice over 4: But in 2008 Fair Isaac is tweaking
that model. They're going to start giving more weight to people
who use different types of credit, like revolving loans, common
in credit cards and installment, common in mortgage and car loans.
Voice over 5: They're also going to be a bit more forgiving if you've messed up in the past,
but done better in more recent years. Or paid late on one account while paying others on time.
Voice over 6: So when these score changes happen
this spring, your FICO credit score might improve if you use different
types of credit successfully and you have older, isolated late payments.
But it might go down if you have more numerous and more recent lates.
Standup: Fair Isaac is predicting these changes
will improve more scores than it hurts. While you can't get a free
look at your credit score, you can see the history it's based on:
just go to annualcreditreport.com.
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