Recent Changes to Credit Scores and Reporting
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. CNN Money 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? View the resources below and this video 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
The Personal Investment Enterprise Program, a partnership between Foothills United Way and Boulder County Community Action Programs, provides tools that empower low-income individuals and families to save and build assets to strengthen their economic stability. To learn more about the program visit bouldercountypie.org. The first step in applying to the program is to attend an orientation meeting with Nino Gallo at Community Action Programs at Boulder County. Nino may be reached at 303-441-3998 or at [email protected].
Tools & Resources:
Importance of Credit History blog from America Saves
Download Credit History and Successful Saving document from America Saves and Experian
6 ways to jump start your credit score blog from America Saves
Building Credit and Keeping Yours Healthy - Video from Bank of America
Get the Scoop on Credit Scores from America Saves and infographic from Nationwide
How To Get a Free Credit Score blog from Bankrate
How Your Credit Can Help or Hurt You from Consumer Reports
Credit Score Quiz or Credit Score Quiz in Spanish from Consumer Federation of America (CFA) and Vantage Score
Get Your Free Credit Report from Annual Credit Report
Good Credit Matters from Money Under 30
Credit Basics from myFICO
Credit and Budget Calculators from myFICO
Download Yourcreditscore and how to boost your score document from CFA and FairIsaac
