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Beginning May 15th, the credit scoring system is being significantly updated, especially for mortgage lending. New scoring models, including VantageScore 4.0 and FICO 10T, will now consider additional factors such as rent, utility, and phone payments. These models also use “trended data,” meaning they review your payment habits over the past two years instead of looking at only a single moment in time. Benefits - More people can qualify for credit: Adding rent and utility payments may help people with little or limited credit history build stronger credit scores. - Good financial habits are rewarded: FICO 10T places more value on long-term responsible behavior instead of temporary improvements. - Medical debt has less impact: Paid medical collections and medical debts under $500 are generally removed from credit reports. - Quicker error correction: Updated consumer protections are designed to help identify and fix credit report mistakes faster. Drawbacks - Lending standards may feel stricter: Lenders will pay closer attention to debt usage and long-term payment patterns, making it harder to hide poor financial habits. - Buy Now, Pay Later accounts affect credit: Missed payments on BNPL plans can now lower your credit score because these accounts are being reported. - Scores may vary more: Different lenders may use different scoring models, such as FICO 10T or VantageScore 4.0, which can lead to different credit scores being shown. - Mistakes can have longer effects: Since the models look at longer payment histories, errors on your credit report may impact your score longer if they are not corrected quickly.