Will New FICO Changes Affect Your Credit Score?

Fair Issac Corp., the company who created the FICO score, will be implementing a new scoring metric in the upcoming months. The new changes will turn a lot of consumers into happy campers. This is because the new FICO score will, more than likely, increase a person’s current score. Now, consumers will have a better chance at being approved for the car or home loans.

With the new metrics, FICO scores will change in the following areas:

• Debts that go to collections agencies and get repaid won’t count against a consumer’s FICO score.
• Medical debts will have a smaller effect on the score. If your only major bad mark comes from unpaid medical debts, FICO says it expects your credit score to go up by 25 points. (Scores range from 300 to 850.)
• A technique to analyze people’s creditworthiness if they don’t have much of a credit history.

The biggest impact, however, will occur in the medical area. Collections agencies reports that nearly 38% of American debt are due to medical bills.  One other key aspect to the new changes is that consumers with no or little credit may feel a favorable change with their credit score.  FICO will give lenders the ability to gain a better view of who their potential customers are and who are likely to pay their loans.

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