Understanding Important Changes To The Calculation Of Your Credit Score


What is your credit score and how does it affect your daily life? If you have “bad” credit what options do you have to repair it? Your overall FICO score is the culmination of years of credit experience and there are some general guidelines we can apply to understand how our score can be affected both positively and negatively.

At Harlow, Adams & Friedman, our Bankruptcy Attorneys work with many individuals and businesses who require debt relief so we understand serious credit problems and the Bankruptcy Code. Our Real Estate Attorneys represent borrowers obtaining mortgages and refinancing or modifying loans so we understand credit qualifications. Consistent payment history, credit capacity being used, length of credit history and types of credit you have are the main principles of the calculation of your score.
FICO recently published news that it is recalibrating its credit scores…

“An important change is about to take place in the method by which most consumer credit scores are calculated. The purpose of the change is to improve credit scores, loosen up credit formulas and thereby increase consumer lending.”

A change in how the most widely used credit score in the U.S. is tallied will likely make it easier for tens of millions of Americans to get loans, the Wall Street Journal reported today. Fair Isaac Corp. said Thursday that it will stop including in its FICO credit-score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency. The San Jose, Calif., company also will give less weight to 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 boosting lending without creating more credit risk. Since the recession, many lenders have approved only the best borrowers, usually those with few or no blemishes on their credit report.”

This is good news for borrowers as consumer credit scores are used by lenders to make credit decisions and affect the rate of interest on a mortgage, credit card and other loans. If you have any questions about your credit qualifications for real estate purchases, re-establishing your credit or the Bankruptcy Code, call Harlow, Adams & Friedman to discuss your options with an experienced Attorney.


Harlow, Adams & Friedman, P.C.
Attorneys At Law
1 New Haven Ave., Milford, CT