Your Credit Score May Be Changing

Your credit score, also known as your FICO score, is more important than many are aware.

In my piece, “The FICO Score,” I review what the FICO score is, what specific FICO scores mean and why having a high FICO score is so important.

A high score tells lenders you’re a good risk when offering credit. A lower score may make lenders cautious about what they offer if an offer is made at all.

So, whether you’re looking for a mortgage, car loan or in the market for a new credit card, your FICO score will play a large part in whether or not you’re approved, and the interest rate you’ll pay.

And, rightly or wrongly, your FICO score may also be used by prospective employers – even for positions that have no connection to financial matters – when making hiring decisions, not to mention insurance companies when they’re determining your insurance rates.

The importance of having a good FICO score couldn’t be more clear.

Changes to FICO Score Calculations

If your FICO score is borderline, you just may benefit from upcoming changes being adopted by the credit-reporting agencies.

The three major credit-reporting firms – TransUnion, Equifax and Experian – have decided to omit many tax liens and civil judgments from individuals’ credit reports.

This move will likely result in higher credit scores for some, which may translate to better approval odds or lower interest rates on loans or credit cards when approvals are made.

According to the company that created the FICO system, approximately 12 million U.S. consumers that have FICO scores will see increases in those scores as a result of this change.

Tax lien and civil judgment data will start being removed from credit reports around July 1, 2017.

If you have a credit report with negative marks associated with tax liens or civil judgments, you should see a change to your FICO score soon after.

credit image courtesy of Stuart Miles at freedigitalphotos.net