FICO and the major credit bureaus have announced significant changes in assessing consumer debt. FICO will lessen the impact of bad medical debts on credit scores.
Additionally, the widely used scoring formula will ignore old debts that have been paid to zero. Another move that could help would-be borrowers comes from Experian and TransUnion. They have started including rental-payment history into credit files.
Most credit scores increase when rental data is incorporated, making mortgage lenders more willing to work with a potential homebuyer.
Why are these changes happening now? How soon until they impact a large number of consumers? What else should be ignored or included in credit reporting?
John Ulzheimer, a credit expert at CreditSesame.com - a credit education website - and a former manager at FICO