Posted on Apr 02, 2013

A new credit score model going into effect could help millions of people who struggle to pay their bills.

The scoring method will be used to determine the VantageScore, which is the score created by the three major credit bureaus. FICO - another important scoring system - may follow suit.

According to the new rules, debts that were sent to collections no longer appear on the score as long as the debt was paid in full. Right now, even if you pay a debt off completely, the fact that you were late and it had to go to collections could appear on your score for 7 years.

In addition, the new scoring factors will allow victims of natural disaster to improve their scores more easily. Right now, the natural disaster puts a halt on all credit scoring activity. The rule is meant to protect victims from being punished for negative credit activity when trying to get back on their feet.

But this method doesn't reward the hard work some people do to build their credit despite the disaster. The new rules will reward positive behavior while still preventing people from being punished for negative behavior.

Lastly, the new scoring method will include rent and utility payments that weren't included before, and will look through public records like bankruptcies to create scores for people who previously didn't have them.

In some ways, this last change could impact a lot of people by creating a bad credit score when there used to be none. It might be easier to apply for various purchases if you have a credit score of some sort, but no one wants a bad score following them around.

There is some good news, though. Our Kansas City bankruptcy firm can help you raise your credit score back to an A rating in as little as a year, even after a bankruptcy. We offer it free to all our new bankruptcy clients.

If you're considering bankruptcy but are worried about your credit, this might be a great solution for you. Contact us today to discuss your situation for free.

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