FICO announced last week that the newest update to its credit scoring system will include changes that could help raise the credit score of millions of people. According to this article in the Wall Street Journal, records of unpaid bills will be removed from consideration once those debts have been paid or settled with a collection agency. Additionally, unpaid medical bills will carry less weight against credit scores than previous versions. People who have been hit with unexpected medical emergencies or were unaware that balances were left unpaid by insurance but have otherwise clean credit could see their scores rise as much as 25 points under the new system. Ryan Smith, of Mortgage Professional America, is optimistic that the adjustment will increase access to home ownership. Even those who qualified for a home loan under the previous version could benefit from lower interest rates, saving considerably over time.
If you have questions about how these changes could impact you, I’m here to help.