HUGE Changes to Credit Score | Will Your Score Drop?!
HTML-код
- Опубликовано: 24 авг 2024
- Huge changes are coming to your credit score with the new FICO 10 credit scoring system. [ Blog Post ] bit.ly/2RAIxQB Learn more about Sebby's Card Picks: bit.ly/cardpicks
Click "Show More" to see Ad Disclosure
Try Plastiq and get $500 in fee-free dollars after you spend $500 (referral link): bit.ly/asksebby...
📈 Get 2 Free Stocks on WeBull when you deposit $100: bit.ly/AskWeBull
Keep your cards organized: amzn.to/2ne3VxA Filmed on this: amzn.to/2piKDY3
Advertiser Disclosure: Some of the card links and other products that appear on this website are from companies which AskSebby will earn an affiliate commission or referral bonus. AskSebby is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as CreditCards.com. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all credit card companies or all available credit card offers.
The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available
#creditscore
📈 Investing Apps:
Get 2 Free Stocks on WeBull when you deposit $100: bit.ly/AskWeBull
Invest for Free with M1 Finance: bit.ly/AskM1Fin...
Frequently asked questions about camera:
Camera Gear:
Camera: amzn.to/2piKDY3
Lav mic: amzn.to/2Vcg3N1
Recorder: amzn.to/2RoeufI
Bendy Tripod: amzn.to/2oKyWsG
You'll need this for the bendy tripod: amzn.to/2pmjuRf
Music I use in videos: www.asksebby.c...
Useful stuff:
Global Wifi Hotspot: bit.ly/2EJXbPJ
Best headphones for travel: amzn.to/2pKLvWn
Monitor: amzn.to/2o0EDCd
Card organizer: amzn.to/2ne3VxA
Need new luggage? Get $20 off your first Away luggage (referral link): bit.ly/2wvIDje
Promo automatically applied at checkout after you create an account.
Support our channel by shopping on Amazon!
www.amazon.com...
-----------------------------
Follow us for updates:
RUclips Subscribe: bit.ly/subscrib...
Newsletter: bit.ly/asksebby...
Facebook: / asksebby
Twitter: / asksebby
Instagram: / asksebby
Mandy's RUclips: / mandyroams
Mandy's Instagram: / mandyroams
I always pay my statement balance before it's due. I'll normally pay 2-3 times in the same month just because I HATE seeing that I owe someone money lol.
Same. Also the reason why I paid off my mortgage and never keep a car loan. I might get one for the incentive, but would pay it off in two weeks or so.
Last time the FICO score was changed was after the financial crises, not many people were qualifying so the banks needed to ease credit, now banks are tightening again .
How will FICO 10 impact students who are currently taking out student loans?
My score just went from a 736 to 653 in one month. I checked all 3 of my reports and there are no past due payments, collections, student loans. I think it’s because of the new FICO 10 system
Vicktoria Solomon No, FICO 10 is not in effect yet.
"Rather than getting too hung up on which model a particular lender is using, consumers should practice fundamental good habits such as paying their bills on time and keeping their debts low”. I'm sure most of your viewers are already doing this anyway.
I hope so!
We are!
@@Amariellah living within your means is a personal decision that has to be made every day.
@@Amariellah Of course...
Will old charge off debits, be put back on the credit report.
Just when the national average score became good, they gotta pull the rug from underneath and put the peasants back in their place.
Krystal as he said in the beginning of the video these changes will not affect credit scores for many years to come.
CraftingKaria I know I'm just making a general comment on it. For most, it won't be too greatly affected anyways.
@@scullymills true true true.
You %100 right
My score jumped 37 points with 2% credit card utilisation
Same here.
Mine went up 3 points for having zero percent lmao 🤣
Shay the feels.
teachmehowtodoge for having zero percent utilization I pay my balance in full every cycle!
Mine dropped 100 points with 98% credit card utilization. :p
Mine dropped 16 points last month with no changes to anything whatsoever and no new inquiries.
I feel like this could help avoid a Chase shutdown when it's triggered by fear of a bust out scheme. The last 24+ months I have done everything to help my credit so this should ultimately help raise my score.
Sebby, I feel like saying "prepay" confuses some people. That sounds like you are paying before you spend. Maybe calling it pay as you go, or spend and pay or charge and pay could clear it up. Great vid as always.
None is going to use FICO 10 for many years. Hell FICO 9 isn't used by many and it's been out for a couple of years.
FICO 8 is, and will remain for a while, the gold standard.
I was thinking the same lol my scores are actually really high with FICO 9 but no one is using that lol.🤷♀️
It's not like they are forcing the lenders to use the newest version. With FICO 10 release, I'm sure it's just there as a guiding tool for lenders who want to operate strictly by the book. Why fix something that isn't broke?
He literally said that in the beginning of the video though.
I think it's very unfair, I worked hard for my previous score smh.
Great tips, Sebby! Low interest loans have been discussed on other channels, now it has even affected how credit scores are computed. 😅
When I began to pay off my debt all of the personal loan offers I received were higher than my credit cards and that was even before the origination fees. I've watched videos concerning personal loans and saw no real benefit in my case.
It is good thing I checked with the 3 credit bureaus; they made a huge mistake on my credit report and I filed the dispute with them. Crazy it is always something with them.
Business cards became more valuable!!
yes, huge
Joel Martinez hey can you explain this?
Owen H thanks. I didn’t know that
But, don't buy a truck, or house, or tractor!
I always prepay my cards which also helped big time when i was getting my mortgage. Buying a car helps if you have absolute terrible credit or no credit at all because there are major used car sellers that have inhouse financing that will give a loan to anyone with a job. Interest will be crazy so best to get a cheaper car you can pay off soon.
I noticed an increase in my score the last year (2019) by prepaying my cards just as you said. In my experience I own a Gold Charge AMEX card in Mexico (not business or corporate just personal) what I have notcied is that they like that you use a lot your card and pay, as soon as possible, this is the main reason why they create all this perks.
I hadn't heard of this at all. Thanks a bunch Sebby.
AMEX charge cards are the way to go!!
I just said this. Folks should get the Amex Green. This FICO Score 10 is awful with this lookback feature.
What about the anual fee? How can it be worth it for the regular joe
Free Speech i just ended up getting the amex everyday preferred as a start up card because i can do the sign up bonus, a lot of people want the sign up bonuses and get into debt
i had to get credit cards because i am planning to buy a house in December. thanks to your channel i have gone from 9/19 score 564 to 710 this week...I am low spender but want travel cards.
The mcdonalds ugly analogy
😂
My opinion on the new score: It seems kinda fair but at the same time I think the trend aspect of it is a disadvantage to people who just recently started improving their score or someone going through a financial hardship
Conversely, I'd argue that this is the reason it makes it better. Those people going through hardships or have only just started being proactive, should probably not be approved for more debt. To me, it makes more sense than taking into account something that happened 5 years prior
One comment: mortgages at least at present are based on older versions of FICO, not FICO 8 and may not be affected by this if they continue to use the older models. Not sure why since in some ways the older FICO scores are kind of irrational about some things, like if you have a bunch of cards with small balances, like those of us who use different cards for different points multipliers, this significantly affects your mortgage score but not FICO 8. I’ve also read that they’re going to be looking at trend lines of debt more strongly than absolute amounts so people who pay off their cards every month will get a boost as their average balances over time won’t be rising. So it might not be as critical to prepay as it might seem.
I pay all of my cards every two weeks when I get paid
Mine just did. Thirty 2 points due 2 closing an account 💯. I'm learning, 2 be careful, about the credit 💳 I want in my name.
Super Good advice as usual!!!!!!!👍🏻👍🏻👍🏻👍🏻
I think this action is meant to stop people from doing stupid things, like to many debt consolidation loans (and still charging on their cards, thus increasing total debt over time) or that arbitrage thing you talked about Sebby. That sounds to risky. Good summary and analysis of the new FICO 10 model!
When does the 24 month look back start? Is it retroactive and looks back at the last 24 months once implemented? Or does it start running only after FICO 10 has been implemented?
@teachmehowtodoge I do that now, but unfortunately, when I got my first credit card I had no idea about utilization, and my limit was super low, so I had like a 90% utilization for like 8 months. This model is going to seriously screw my credit limit.
@teachmehowtodoge Is it paying before due date? Or paying off before statement end date?
@teachmehowtodoge It's not the due date you want to focus on, it's the statement date. Pay it down before the statement date.
Thanks for the heads up Sebby!
I wonder what FICO 10 will do to major charges that are paid off on time. A simple example, in June we charged our air fares and cruise fares along with our normal charges. There was about a $10k difference above our normal charges in a given month. We took a 40 point hit on our score for that one month. Then when our monthly payments posted and all cards were paid in full, the next month our scores went back up the 40 points we lost. This would be the on the current FICO system.
Chase doesn't easily let me lower my current balance with an early prepayment. Instead, the payment first lowers last month's statement, so I would have to pay that off early (before autopay) before I can lower the current month's balance before it closes. With Bank of America, however, any early payment first lowers the current balance. Is there a way to do this with Chase as well?
Are they currently taking snapshots and going back to summer 2018 or are they taking snapshots after it launches... So it wouldn’t come into affect until 2022?
If you look on your Transunion credit report, directly from Transunion, they show in detail the exact month your credit card limits increase or decrease and it keeps a record of this on your report. Also, it shows all of my balances reported for the past two years. I think FICO 10 will be up and running correctly on day 1.
Someone trying to buy some new dj gear soon? 😂 love seeing my fav youtubers comment on my other fav accounts
I find our credit system and scoring so frustrating. I can do it just fine and play the game. However why should I have to, just to get a perfect score. To me, if you pay your cards in full every month regardless of the balance and never miss payments. Whether personal loans or credit cards then eventually that should take me to a perfect score. Nope not our system. They want you to have credit and want you to use it but not too much or they harm your credit score. Use a personal loan so it’s easier to make static monthly payments for a year. Yup that’s going to hurt you. Say you decide to follow Dave Ramsey and ignore your score. Because of this you don’t have any credit and your score is low. You go look for a job and they run your credit and guess what, they don’t hire you because of your low score because they think you’re irresponsible. Yet you’re probably being more responsible then 90% of the employees that already work there.
Luckily I still keep my utilization very low. Learned from the best.
But recently I had to use my card here and it was at 96% utilization. BOY did it hit hard. I went down 20 points.
I have no credit cards, no auto loans, and no debt instruments with the exception of my mortgage. I really don’t care what my credit score does. I never check it. It was an item of interest only before I purchase my home, now I could care less. Should I have a different plan? Why or why not?
The fair credit reporting act.... Down the toilet!
The best part about CC churning is you only use a few cards for rewards points but since the other cards are never used your utilization stays low :)
Random question, but can you share your desktop wallpaper? Looks pretty sick.
Lol, loved the McDonalds analogy.
Hi Sebby! Can you make another video on how to off set Amex plat?
Oh my, my credit went from 686 to 525 smh. I been paying my rent & bills on time, and all. My fiancé, and I were only late on his car that I cosigned for years ago, and within the last month, and a half, 2 months is when the drop happened. I will continue to pay things on time, but do you know of other ways to build your credit, without an actual credit card? Thank you very much.
Up until now I thought that the statement date was the due date. I have been pre-paying my cards because I thought it was just paying them at all lol, I thought there was a due date and a "report date"
I need a little help here. Should I continue using my credit card with a low apr but a higher balance that I’m
Trying to pay off or a card with a higher apr that I can pay off the total amount due each month? I am using the cards that will give me a higher cash back on every purchase to somehow help me out with a little bit
What's old is "new" again. The 24 month "snapshot" is how credit reports used to show payment history in the 1980s.
Bad postings(late payments) remaing for 7 years after that they must be deleted. How are they going to use the credit score from 2 years ago that might have bad information at that time. That will be againtst the law because they are still using information over 7 years.
Interesting point
Hopefully All the Creditors Stick to FICO 8 like they do now when FICO 9 came out!!
what was their problem with FICO 9? that score loves me but i think only WF uses it and I don't even bother doing biz with them
I feel it already. i haven't missed a payment in years. my CC balance is high but its gotten less each month since it went up. I still got a notification today that my score went down 3 points. I also pay extra on my car loan each month. if thats not good enough then when FICO 10 hits hits im as good as gone.
On personal loans; is the new score going on payment history, as in are you following the loan payment schedule and paying on time, or us it strictly amount based? I was just thinking it seems strange to punish a loan to leverage debt more than an auto loan or home loan.
My score drops 39 points today. I just found out that my CITI DIVIDEND card of 17yrs was cancelled due to inactivity. I probaby have not used that card more than a year. It's my own fault that I cant keep up with too many cards. So I dont need my score to drop anymore. Gonna take it easy this year and not appling for more cards lol.
Kim Lam it helps to keep regular spends on the cards you’re not planning to use. Ex: gym membership, Netflix...
I have a WF card that is the same for me. I use it every 6 months or so for a quick purchase at CVS or something.
The crappy part is since I do not bank with WF anymore, I have to go to a branch to pay it.
@@Spydah3kgt most credit cards portals allow you to add a bank account from a different bank to pay them online.
@@martinasandoval5326 yes, but last time I checked it still wasn't an option on my WF visa. WF is an awful bank though, so I expect no less.
Bro take turns with cash rewards cards and have memberships on the other cards just to keep them active. Citi did the same to me after 2 years!
Thanks for the info🙏🙏🙏
I thought utilizing your credit card to the upper limit and paying off at end of month raised your fico points? Are you saying not using your credit card/ utilizing only 1% is actually better for credit ? makes no sense.
Utilization is a huge risk factor. The higher your utilization, the lower your credit score: ruclips.net/video/Z1ZIXS88V0o/видео.html
If a creditor begins using the new 10T model in the summer of 2020, will they be able to look back at the previous 2 years all the way back into 2018? Or will be two year look back ability begin to clock out when the new scoring model is first used?
My understanding is that they'll be able to look back into 2018. It's highly unlikely we'll see anyone use it this summer though. Maybe Summer 2021?
That’s right awesome information
Yes...mines dropped on CK and I'm mad as hell, same score good on Experian.
In conclusion: play the long term game
I just paid off all my debt and my credit score which already is hurting dropped from 616-884!
I'm doing a loan....but I'm doing it through Self Lender....because I like the idea of paying your loan off before you get it :) :). It's like putting money in a savings account and having it being reported on your credit lol. Well, minus the frees and stuff, but still. I like that more than getting the money first and then paying it back lol.
I don't know if "prepay" is quite the right word, although it is accurate in that you're paying accrued charges before the statement for them is generated. But it sounds more like paying money before you charge something, i.e. making a negative balance first. I'm not sure I can come up with a better term tho...
Sebby doesn't necessarily mean paying before buying; basically it works like this:
You get your Jan 1st statement, and the balance is (hopefully) $1. Or even let's call it $1,000.00. Due date is Jan 23. You rack up another $1,500 by the 23rd so your total balance on your due date is $2,500.00. You only need to pay the Jan 1st statement balance of $1,000.00 to avoid interest. Your next statement will then be the remaining $1,500.00 on Feb 1st, due Feb 23rd. That will be the balance reported to the bureaus.
But instead of paying your statement balance of $1,000 in full on Jan 23rd, you pay your _total_ balance of $2,500.00. That's prepayment. Your total balance will be zero on Feb 1st, your next statement date, and a zero balance will be reported to the bureaus. Or leave a few dollars balance as you wish.
Some people pay their total balance weekly. I do it as above, leaving a small balance on two cards and zero on the rest. Whatever you're most comfortable with. But you don't have to pay before you spend.
This model will make having and maintaining a 700+ score more difficult... and in some ways I think this is a good thing. It will cause getting more credit more difficult for person who shouldn't be looking for credit... and in the long run, might help some people stay out of credit card debit
From the research I’ve seen people within the Good to Excellent range with FICO 8 should get a boost with FICO 10. People on the lower end with FICO 8 will see a drop with FICO 10
Basically 10 is going to screw over the poor and working class even more. Seriously 24 month snap shot and punishing personal loans. My credit is excellent now and for the last 5 years but, I worked to get my credit to a level that I could get a personal loan to help boost my credit, that was the path I used and I’m angry that that option is being closed for people.
I’m one of the crazy folks that pays as I go (I know, I know); however, this keeps my utilization down to 1% or 0% each month. Bank of America has a great bill pay set up for this. As long as you post a payment before 2pm PST, it will deposit on the credit card the next day. It also allows you to set multiple Bill pays for the same card on the same day. So, say you are working to hit minimum spend or out shopping, you can set multiple payments for a specific card. This, for people who pay as you go, helps to keep track of what has or hasn’t been paid.
To me, doing it gives you a better understanding of your finances.
Kind of like a weekly meeting with your manager/boss/whoever vs. a monthly one. Easier to see blind spots and adjust.
That's almost the same that I do. Pay it at least once a week, sometimes twice, depending on the spending
Regarding utilization, it seems like if you always pay off in full, the 24 month snapshot can also work in your favor, your average utilization in the past 24 months could be lower than your current balance, say in january when you might have spent more during the holidays?
0% apr for life!
Me too!
The system is crap in the grand scheme of things. As of now, your score is affected by NOT having recent installment loan and having few account.. Now they're penalizing you for the steps they told you were needed in order to obtain a higher score.
Unfortunately if you have a low FICO scores already, its likely you'll get a lower credit score under the new FICO 10. Consumers with poor credit tend to score lower under the new scoring models and it applies the other way round.
What about first position HELOC will those be consider mortgage loans or line of credit? Will they hurt your credit score in the new system?
I have to watch your videos @ 1.5x speed.
Great video..Thanks
FICO 10 is fair, to the responsible.
I think the issue is the look-back element for utilization -- especially since current models have a "current picture" model.
I already prepay my cards, and I don’t really use my credit cards that much unless I have to but I am nervous how my student loans will affect my score.
I've had a few cards that were too slow to process. I made a payment a week before autopay was set. Yet it pulls the full payment out when auto pay closed. Then a few days later when it processed I had a notice that I overpaid. =/ Wish there was a way to automate paying a week early via autopay instead...
Thank you for the video. Do you know how business credit cards will impact personal credit scores? Let's say chase ink unlimited, how does the utilization rate impact my personal? I usually keep the balance pretty high if not maxed out.
good info
Delta has new designs for the credit cards starting today! Video on these? I wanna know if any are metal!!
I always prepay lol. I didn't know it was a thing!
I have been regularly paying my cc every week since my first one, with chase reserve u can pay it once a day, I feel like this is the best way to actually spend within your means
I agree Sebby🤝
Awesome video man, solid advice all around. I don't personally have a mortgage and my score is high tier 1, so you're right, it's not worth it to take out a mortgage just to increase your score.
Sebby - love your channel. I’ve learned a lot. To clarify, are personal loans factored into credit scores today? Will personal loans be factored in with FICO 10’s upcoming algorithm changes?
What happens if some months I have a 0% utilization rate in my card some months? Is there any issue?
Since Self Lender counts as an installment loan. Would that negatively impact my score?
FICO 10 takes a 24 month snapshot from each card or all credit cards? Would it be better to divvy up credit cards or maintain one card with a small balance each month?
Sebby you are a credit card god!
I disagree with you on one thing. I pay my balances off every month before the statement closing date. I usually let 2 cards with low balances go till the due date, this way my utilization has never been above 5% in years.
If you have high credit limits -- sounds like you do -- this is less of a problem :)
When you prepay are you better to have a statement balance of $1 or $0?
How about Charge cards with no limit (amex gold)?
Good question. I guess for now it is assumed the same since any charge card holder has to pay charges by the due date in full.
So when this hits in summer, it will go back 2 years. Or it will track it for 2 years starting that month?
Hey Sebby, I have a question. It's the smart way of thinking of not taking on CCs if you can't pay off your credit card in full and or if you're holding high balance but isn't that the point of Banks offering CCs? They want to take interest off your CCs as profit so my question is how much is it weighted on someone who holds a balance and pays interest vs someone who pays back their credit card in full?
Some banks likely have models that focus on this. I wouldn't be surprised if subprime banks (or ones who derive the majority of revenue from interest/fees) would prioritize this.
Others like Amex make the majority of their money from swipe fees (you can see this on their annual reports).
What app do you use to manage your cards in one app!!!!
I’m wondering how much a personal loan will drop someone’s score with FICO 10.
Will this apply for Canada also ?
FICO 10 fair? I think is not about fairness, it"s about logic. Anybody can clear up their balance for a month an ask for another credit card. I've done that before. Off course I pay on time allways and have all the intentions to pay up everything but they can't read my mind and have no way to know mt intentions. Why do they have to take a risk?
Hey Sebas! I just got a citi bank credit card with with $2600 credit line which I’m thinking to use for a transfer balance. My credit utilization won’t get better but I’m paying 24% APR on my other card. Do you think it will affect me by using the whole credit line in my new credit card??
Luismessimer I would do it. Lenders will not switch to this new FICO model for a while. I think you can pay that 2.4k off well before. Good job at asking questions and investing in yourself.
Hi Sebby- So I recently paid off my car loan and my score dropped 20 points! It makes no sense and I'm so annoyed. I read in some forums that its just a temporary drop and it will go back up again. Do you have any experience with this? Any feedback from subscribers who know about this also welcome.
This happened to me when I paid off a secured loan after getting a big commission. Your score should go up when you pay off debt right? I waited a few months and when it didn’t go back up I took out another secured loan for the longest period with the lowest payment and I will not pay it off early unless I replace it with a car loan. Took another few months but it did go back up. Stupid
Is it going to look really bad with the new Fico10 system if I get two credit cards within a month but I carry a very low balance 3% to 5% of my balance I just want interest free for 3 months and my new miles credit card doesn't offer that.
Thanks
New lens?
Finally put an end to the “ your utilization has no memory “ fucking hate that phrase and idea, it breeds irresponsibility . I welcome this change. I make weekly payments to my cards already anyways and rarely use 10% of my limit.
what about the people that have paid off there credit card in full for the past 24 months could this new system increase the credit score?
So i am one of those crazy folks with low utilization.. but i struggle with paying too quickly so my stuff goes and comes back with 0% utilization. Will this new FICO make a difference? I spend 2-3K and pay it off that week or the next week.. thoughts? Advice?
I did this, leaving 1$ on my account after closing statement and my fico score dropped 12 points
FICO scores generally fluctuate. As long as you don't have any "permanent" marks, it doesn't really matter in the long-term.
Permanent = late payments, defaults
Prepaying credit cards before the closing date is a good idea to lower credit utilization scoring, however never pay them down to $0 because reporting will look like you don't use the card. This will not help to increase your credit score, and may cause it to drop. It will appear as an inactive credit card, never showing a borrowing
epayment responsibility cycle... It also looks bad to the credit card company itself as they will never show payments being made after closing which could effect how much they are willing to increase your limits or whether they will send you per-approved offers in the future.... You must show SOME activity in order to raise your score and ensure future opportunities.
Creditors are in the business of making money. If they see inactive credit cards they won't waste their resources on you and give higher credit limits to other clients who are more likely to use it and to carry a balance.
Yep, you want at least 1 card to be active for this reason. It could be $1 and that's fine.