HUGE NEWS on credit scoring in todays Wall Street Journal--FICO will no longer be penallizing consumers for paid in full debts (up until now, these credit marks were derogatory) and will ease off the nuclear destruction on credit scores for medical bills in collection. Also, BIG SHOUT OUT to the Consumer Financial Protection Bureau for making this happen. From the Wall Street Journal: The producer of the most widely used credit score in the U.S. on Thursday announced a major overhaul of its scoring model that could boost bank lending and lead to thousands of dollars in savings for borrowers with debts that are in collection. FICO, which is based in San Jose, Calif., and whose scores carry its name, said it would no longer factor in any debt or account that is with a collection agency and that consumers have paid off or settled. FICO also announced it will place less weight on unpaid medical debt that is in the collection process. Most lenders check applicants FICO scores to help determine whether to extend credit to consumers and at what interest rates. The company will begin rolling out the new scoring model, named FICO 9, to credit bureaus this fall and to lenders later this year. FICO says the changes come after months of discussions with large lenders and the Consumer Financial Protection Bureau to determine ways to boost lending without injecting new risk into financial institutions. The new scoring model is expected to provide a much-needed boost to consumer lending, with lenders likely to greenlight loans for some borrowers who have been shut out since the recession or charged high interest rates.
Posted on: Fri, 08 Aug 2014 00:38:45 +0000
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