Retail Credit May Come Easier for Many Borrowers
New York, NY, Aug. 8, 2014 -- Obtaining retail credit could come easier for millions of Americans following a change in how the most widely used credit score is calculated
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Fair Isaac Corp. said it won't use any record of an overdue bill that has been paid or settled with a collection agency in its FICO calculations.
The firm also said it will put less importance on current unpaid medical bills that are with a collection agency.
The moves follow months of discussions with lenders and the Consumer Financial Protection Bureau aimed at loosening credit without creating added credit risk.
The result is that more consumers should become eligible for credit, especially those who had been shut out of the market or faced higher interest rates due to low credit scores.
Under current practices, collections can affect credit scores as much as foreclosures and bankruptcies, even though the debts are often small.