Gerri Willis, author and host of CNN's "Open House" wrote about the new FICO '08 formula for determining creditworthyness in this article. As you know, the FICO score determines creditworthiness in the eyes of almost every creditor. It determines whether you are approved for a loan, and what interest rate the creditor will extend you. Insurance companies vary rates according to your FICO, some employers and potential landlords also use the FICO to guide the price you get charged for their products or services.

According to Gerri, Fair Isaac, the company that develops the formula (Fair Isaac is the ‘F' and ‘I' in ‘FICO'), has created improvements, especially for consumers in the 600-700 score range, the so-called subprime borrower. Several improvements were announced. The new scoring model ignores credit issues concerning values less than $100 dollars. Presumably, paying late on a small "nuisance" debt has very little correlation with how you perform on more important loans like a mortgage, auto, or even a credit card debt.