Financial considerations are often foremost in the minds of New York residents who seek to keep moving ahead economically and enjoy a stable lifestyle. When unexpected circumstances occur and debt levels rise, many people feel the pressures in the form of financial stress, harassment from debt collectors, falling credit scores, and worries about bankruptcy. Because credit has become more and more important in American society and can affect everything from getting a cell phone or electricity to securing a mortgage, many people may look to a debt workout or settlements in an effort to prevent further damage to a credit score. Fortunately, changes to the credit score calculation formula are likely to benefit a number of people throughout the country.
FICO is one of the most-commonly used credit scoring agencies, claiming that approximately 90 percent of lenders in the United States use and rely on its credit scores for consumers. Now, this agency will be implementing a new scoring formula this fall that is likely to raise the credit scores for millions of Americans. One of the biggest changes is that accounts that were sent to collections but have since been paid will not be counted against a person’s credit score. Additionally, unpaid medical bills will have less of an effect on credit scores as FICO will distinguish between medical debt and non-medical debt. These changes are expected to positively affect consumers’ abilities to qualify for auto loans, student loans, credit card, private loans and eventually mortgages.
As this news story illustrates, maintaining good credit is a primary concern for New Yorkers who want the flexibility to apply for and qualify for loans, credit cards and mortgages. Many people are scared of the possibility of bankruptcy, not only because of what the process may entail but also because of potential effects on their credit score and future borrowing capacity. For these reasons, many people seek out alternative forms of debt relief that can provide some breathing room and help them move toward financial stability.
Many creditors, especially when an attorney becomes involved, are willing to work with borrowers and consumers in order to renegotiate debt or compromise on a workable debt repayment solution. Despite people’s belief otherwise, it is often possible to negotiate mortgage modifications that can prevent foreclosure and the loss of the home. However, it is important to act quickly and begin the process of renegotiating sooner rather than later. Other alternative debt relief solutions include settling accounts in collections or credit card accounts for a lesser amount and eliminating second or third mortgages based on a home’s valuation.
Source: Chicago Tribune, “Millions to get break in new credit score calculation,” Gregory Karp, Aug. 8, 2014
Source: Chicago Tribune, “Millions to get break in new credit score calculation,” Gregory Karp, Aug. 8, 2014