Recent Changes to Credit Scores and Reporting

Financial Education
May 26 2015

Guest post by Katie Bryan, America Saves

                                                      

Credit scores play an important role in your financial life. Not only is a good score essential for obvious financial events like qualifying for a loan or getting a credit card, but also for the less obvious like obtaining cell phone service, renting a car, or perhaps even getting a job. Two important changes to credit scoring occurred in April that could benefit you.

 

New FICO Credit Score

 

First, FICO announced a new credit scoring method that utilizes account payment histories on utility, cable, and cell phone bills, the Wall Street Journal reported. CNNMoney reported that up until this change, those bills could only hurt your credit, not help it. This new scoring method will open credit-based opportunities to millions who have not otherwise had a credit history, never mind a good credit history. FICO estimates that nearly 15 million consumers of the 53 million “unscorable” people in the U.S. will be issued a score based on this new alternative data. It’s important to note that if you already have a score from FICO, you will not get a new score; this alternative data is intended only to score those who do not have credit scores or credit reports. If you haven’t had a score in the past and have one of these bills in your name, you should be able to check back and see if you have a score later this year.

 

Access to Credit Scores through Nonprofit Counselors

 

Second, the Consumer Financial Protection Bureau reported that millions of consumers will now have access to credit scores and reports through nonprofit counselors. Previously, if you visited a nonprofit counselor and they purchased a credit score and report on your behalf, they were prohibited from sharing that information with you. Now, FICO has announced it has reached new agreements to allow nonprofits to share scores and reports bought on behalf of consumers.

 

Importance of Credit Scores

 

These two new announcements are encouraging, as more people will be able to get a credit score and have access to credit scores and reports. Why is having good credit is so important? Visit AmericaSaves.org and watch the video below to learn more.

 

 

 

Katie Bryan works for America Saves, managed by the nonprofit Consumer Federation of America (CFA), which seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. Learn more at americasaves.org.

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