Here's Why Millions of People Will Have Higher Credit Scores Soon and How You Can Find Out If You'll Be One of Them

Here's Why Millions of People Will Have Higher Credit Scores Soon and How You Can Find Out If You'll Be One of Them

Looks like you can apply for that new apartment after all.

Published 1 week ago

In July, credit bureaus will be changing the way they calculate credit scores and the difference could mean a bump in your numbers.

According to the Wall Street Journal, almost 12 million people may see their scores rise later this year. The change will come after removing several debts that negatively affect a credit score. 

Certain long-overdue debts and unpaid taxes will no longer be a factor in determining someone’s credit score. This means there will be less black marks lowering the credit scores of millions of individuals, a credit bureau spokesperson said in a statement on Monday.

When it comes to the changes, they are predicted to have a “modest” impact on credit scores, according to the statement from the Community Data Industry Association. Nearly 11 million people would have a bump of less than 20 points, while about 700,000 would see a 40-point bump, the Wall Street Journal reported, citing FICO data. 

As a result of financial investigations, it was discovered that many court ordered debts were not properly enforced, and the records were kept in sloppy conditions. Therefore, court orders for unpaid debts will no longer be counted as black marks on credit scores. These changes indicate that a court-ordered debt or unpaid tax may not be the best way to evaluate an individual’s ability to handle credit.

Credit bureaus TransUnion, Equifax and Experian will be changing their policies in the summer to remove court judgments and tax liens from credit scores.

Written by Rachel Herron

(Photo: skynesher/Getty Images)

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