Changes are coming for how your credit score may be calculated
NEW YORK (WKRC) – Big changes are coming for people’s credit scores this fall that may affect the actions of careful spenders and money borrowers.
There are very noteworthy changes for both of these categories, according to the Associated Press. For those with a high credit score, not closing your credit card accounts could hurt your ranking, while those with a low credit score could gain some sort of aid when removing medical debts, civil judgments, and tax liens.
When it comes to deciding if someone can get approved for a credit card, credit scores can play a strong determination as to what spending limit and interest rate can be given.
These changes are being executed through VantageScore, which controlled over 8 billion account applications in 2016.
Trended data plays a big role in this change. This means that anyone who is paying their debt is likely to have a higher credit score compared to someone who makes their minimum monthly payments, but is still gaining credit card debt.
People with a high credit score will be impacted the most through this because trended data shows cautious signs of borrowing money before the individual is seriously affected.
“When it comes to prime borrowers, you may not have bad behavior on your credit file, but a trajectory provides very powerful information,” said Sarah Davies, the senior vice president for research, analytics and product development at VantageScore.
This also brings changes to open accounts that people started up a while back. Someone who is $5,000 in credit card debt but has a $50,000 card limit through several cards might score better unlike someone who is $2,000 in debt but has a $10,000 limit.
VantageScore will begin to mark anyone that may gain a high amount of credit card debt. People that use the any sort of rewards program through a credit card could face consequences as well.
Those who are strongly impacted could lose as much as 20 points, not including if they’ve suffered negative repercussions in the past.
Mortgage payments will not be affected.