Staggering Changes To Your FICO Credit Score – What’s With Your New Credit Score?

We all are aware of the fact that the present lending industry entirely depends on credit. No lender will probably lend you any new lines of credit if you have a poor credit score. FICO credit score is the most common score that is used by the lenders throughout the US and your credit score is a three-digit number that speaks about your financial worth and gives the impression of how you’ve managed your finances in the recent past. While a good credit score, above 700, means that you have successfully dealt with your debts, a poor credit score means you’re not able to manage your income in accordance with your debts.

According to recent reports, under a major tension by the credit bureaus, they have announced that unpaid medical bills will now onwards be treated in a different manner and errors in your credit report will become easier to fix. The recent announced changes, applauded by the consumer advocates come due to an agreement between the 3 big credit bureaus, Experian, TransUnion and Equifax and General Eric Schneuderman, New York Attorney General. As per the President of Consumer Education at, such changes need to be brought about by some action taken by Congress and he considers these changes as some of the most substantive over an entire decade.

A Look into the Changes

Your credit reports are there to calculate your vital credit score, and this is the number that determines your access to new credit card offers, new loans, apartments and even jobs. It is also your credit score that determines the interest rates that you have to pay on your various loans. This particular agreement is supposed to reform the entire credit report industry and offer vital protections for thousands of consumers across the nation. The three agencies are supposedly working together to help the consumers receive loans at an affordable rate.

Under the new plan of credit reports, unpaid medical bills will not be directly reported to the credit bureaus for about 6 months after they have been recorded as delinquent. This will give enough time to the insurance companies to pay claims and this also prohibits medical debt from being there on your credit reports due to disputes or delays. In case you’re paying your insurance premiums and your insurance company is paying for that bill, you should not have any credit problems regarding that. Credit reporting agencies will also remove medical debts that are being paid by insurance companies for a long time.

Unpaid medical bills have become increasingly common on credit reports as 55% of all delinquent debt on credit reports stem from medical expenditures, as per a report by the Consumer Financial Protection Bureau. In the year 2014, Fair Isaac Co., which is the founder of the well-known credit score known as FICO also reported that it would give less importance to medical debt while computing your credit score. This comes as a benefit for the consumers as a person will still be considered as a good and worthy borrower even when they have been struggling to pay off their medical bills or have ended up being in collections.

3 Concerns with the New Credit Score

Although it is being said that FICO has already released everything that is new with this score, but FICO is yet to release the entire details of it. However, it is only the headlines that raise some bigger concerns.

  1. With the new rules coming into effect, the consumers might have to keep a close watch on yet another database. Previously, consumers were trained to get a free copy of their report from any of the 3 credit bureaus and there was a process of disputing. But now the consumers will have to keep an eye on NCTUE also and this may become a tough task for them.
  2. The available information is the main driver of your credit score and this particular data has become restrained. FICO has used 2 new sources of data in order to identify the people who are responsible about using their credit. However, this is indeed a restrained dataset that doesn’t include critical information.
  3. Does the new credit score model mean that people won’t be able to change homes anymore? This is a world where people are adapting their behavior to the new scoring model. People are afraid to shop for a better deal as too many hard inquiries will hurt your credit score.

Thus, creating a credit score that will make consumers move less from one house to another may be good news for the mothers but does it seem to be a good idea for the economy? So, before you take out debt consolidation loans for bad credit to shrug off your high interest debts, ensure knowing about the new scoring model.