Equifax Uses New FICO Score

One of the Big Three credit bureaus said it will now be using the FICO 9 Score. Believe it or not, this affects you.

The FICO score is the “Big Kahuna” credit score these days, and is used by credit unions, credit card issuers, banks, mortgage lenders – even employers – as a way to determine your credit-worthiness.

With FICO 9, changes have been made to the way your score is created that can potentially help you in the long run. For instance, FICO 9 changes the way that consumer collection information is assessed – mainly in that it bypasses paid collection agency accounts.

In the past, any collection activity on your account would “count against you” – and would keep doing so for years. With this change, many consumers who have paid off accounts in collection will no longer have that collection activity held against them.

FICO 9 will also distinguish medical from non-medical collection agency accounts. This is a big one, since many otherwise responsible people wind up being overwhelmed by medical debt – and often have some of their medical bills go into collection.

Sometimes, people wind up with medical bills in collection simply because they thought the bill was to be paid by their insurance company.

It is therefore a good thing for consumers that FICO will be assessing medical debts differently than regular debts. Now, dealing with a medical crisis can be “walled off” from your other credit dealings. This gives you a better shot at recovering your credit-worthiness after being clobbered by medical bills.

Equifax, TransUnion and Experian are the Big Three consumer credit bureaus. With Equifax now saying it is using FICO 9, this scoring system is sure to become the template for judging credit-worthiness for millions of Americans.


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