If you haven’t heard, your clients’ credit scores may have gone up! Thanks to the new standards adopted by all three credit bureaus, including the removal of library fines and parking tickets, many consumers are seeing a noticeable jump in their credit score.
Now, the big picture of credit health matters the most. New oversights apply to inaccuracies that previously went unnoticed and certain types of debt that had harmful effects on credit scores. For example, a client with good payment history who makes a one-time purchase of an expensive flight and raises their utilization will no longer suffer from such a drastic shift in their score.
Before you post the news and offer clients guidance, review the changes below and what it means for your credit repair company and finding new leads.
Equifax, Experian, and TransUnion shifted how they calculate credit scores to gain better insight into cardholders’ credit behavior and risk level. There are significant updates to reporting, like the new notation system citing when an overdue balance has been paid in full.
The bureaus’ new model for calculation focuses on trends in credit history including timely payments or amount of total debt owed. Consumers will see some major changes and you can read this guide to show them the benefits and pitfalls they’ll see.
In the past, paying the minimum amount due on cards wouldn’t ding a credit score, but that’s no longer the case. Now, people will be penalized for holding a small amount of debt and can only improve by paying down larger sums of money. These changes will likely affect individuals with high credit limits.
The following will cause harm to a score:
The following behaviors will positively affect a score:
Many of the older rules still apply, including:
As a credit repair business owner or a financial service provider wanting to help improve a client’s financial well being, you need to change services to match the latest news. For example, it used to be good advice to keep all credit accounts open. Now, even with low balances, a larger number of open accounts can hurt a client’s score.
Contact clients directly to help keep them on the right track. Set up an appointment and use these tips:
The tightening of credit standards will benefit many families financial security. Share the good news and make sure to include that the following items longer impact scores:
Consult this last list when reviewing a credit file to make sure each is removed and a client’s score if caught up with the latest score calculation standards.
Now that you are updated on the latest news, you can offer insight to both new and established clients who may not realize they have a new score or how to reap the benefits. Take action to use the momentum of this change in credit scores to grow your credit repair business, such as:
A new higher score is great news for many, but a credit hero knows that credit health has to be monitored no matter the change in calculation.
Find more insight into helping individuals establish good financial habits regardless of changing bureau standards here.