Three New Changes That Can Affect Your Credit Score
FICO 9, the updated version of a credit score which can affect almost every aspect of your monetary life, will unveil some new changes to FICO’s grading requirements. While it will take awhile to adopt the system—and you should keep practicing continuous good credit practices regardless – here are the three important things to know about these upcoming changes.
Medical Debts Have Less Impact Medical problems, and the debt that can occur from it, will now have less weight on your credit score. This is especially good for those who have this as the only hiccup in their credit history, as they can expect to see an approximate 25 point raise.
Paying off Debt at Collections Settled or paid debts that were sent to a
collections agency will now affect your credit score less. In the past, any unpaid debts sent to collections could really negatively affect your score, but the new forgiveness policy could add 100 points or more to one’s credit score.
No Penalization for Little Credit History With a new algorithm, the new score is working to treat those without an extensive credit history more fairly. While before those who used credit cards less or were young and without much credit history were penalized, the new system works to reflect the reality of their “risk” in terms of loans.
For more information about FICO ’s new scoring, check out the full article at inc.com .
Posted by Carson Rolleri on September 29, 2014.Source: www.bbb.org