7 Changes to Your Credit You May Not Know About

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Your credit can determine everything from whether you get a loan to whether you get a job. That’s why it’s important to keep tabs on both your credit report and your credit score.

In recent years, there have been changes to how credit reporting companies do business. While most of these benefit consumers, some could have a negative impact on your score.

Here’s what you need to know about recent changes that affect your credit.

Installment purchases may factor into scores

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Buy Now, Pay Later offers have surged in recent years. Commonly known as BNPL, these allow consumers to make a purchase and then pay for it over a period of several months.

As they become more popular, you may soon see these payment plans appear on your credit report. In 2024, Experian announced its reports now include “pay-in-4” loan information from Apple Pay Later. It could be just a matter of time before other companies follow suit.

Paid medical debts no longer count against you

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About 1 in 5 U.S. households had medical debt in 2022, according to the federal government’s Consumer Financial Protection Bureau (CFPB). What’s more, in the second quarter of 2021, medical bills made up 58% of the accounts that were recorded on credit reports as having gone to collections.

While medical debt can still be listed on credit reports, paid-off bills are now removed thanks to a change implemented in 2022. At that time, the three major credit reporting companies — Experian, Equifax and TransUnion — announced they would remove paid medical bills. Previously, old debts could remain on a report for up to seven years.

There’s more time to resolve health bills

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In addition to removing paid-off medical debt, the credit reporting companies are also giving consumers more time to resolve outstanding bills.

In the past, you had about six months to work out payment arrangements with creditors before a delinquent medical bill would be listed on your credit report. Now, you have a year before medical debt will be added.

Small medical collections don’t count anymore

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Another change instituted by the three credit reporting companies is the removal of medical debt that is less than $500. This change went into effect in 2023, and with it, the CFPB says roughly half of those with medical debt on their credit reports should have had it removed from their history.

Credit reports are free weekly

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One silver lining of the COVID-19 pandemic is that you can now access your credit report for free each week.

By law, all three of the major credit reporting companies are required to offer consumers one free credit report each year. This provides consumers an opportunity to see what is reported about them and whether there are errors that need to be corrected.

However, once the pandemic hit, companies began offering free reports weekly so people could keep better tabs on their credit during a tumultuous time. In 2023, it was announced that the free weekly reports would continue indefinitely.

You can request your free reports on the official site: AnnualCreditReport.com.

Home loans are changing to a new model

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In 2022, the Federal Housing Finance Agency announced that mortgages originated with Fannie Mae and Freddie Mac would begin using newer credit scoring models, FICO Score 10 T and VantageScore 4.0. These replace the classic FICO scoring models that have been used for nearly two decades.

Beyond looking at “trended data,” the new scores may incorporate rental data and ignore medical debt when calculating a credit score. While it may take another year or so before this change is implemented for all conforming mortgages, some mortgage lenders are already using the FICO Score 10 T for non-conforming loans. These include Liberty Home Mortgage, Movement Mortgage and CrossCountry Mortgage.

“Conforming” mortgages meet stricter guidelines than nonconforming ones. Nonconforming loans are also usually bigger than traditional mortgages.

Track record matters more than ever

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It may surprise you to hear that you don’t have just one credit score. Instead, you have many credit scores, each calculated using a slightly different formula.

One of the newer credit scores available is the FICO Score 10 T. Rather than calculating a credit score based on the most recent month’s data, the FICO Score 10 T looks back about 24 months to see how your finances are trending. Specifically, it is concerned with whether your outstanding account balances are trending up, down or staying the same.

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