Changes in how one major credit score is calculated are coming in the fall, and the shift could make the key number more forgiving for people who have debt.
The VantageScore, a credit scoring model developed by the three major credit reporting bureaus TransUnion, Equifax and Experian, will put more weight on the trends in a person’s credit report. That includes whether they have been paying off their credit cards or racking up more debt, says Jeff Richardson, a spokesman for VantageScore Solutions, the company that offers the score.
The new data is meant to provide more context to a consumer’s debt load and help lenders get a more holistic view of a person’s credit behavior and risk level, Richardson says.
Take two people who both are using 50 percent of the spending limit on their credit cards. Under current scoring models, both borrowers would be hurt by that high card utilization, since lenders typically like to see that consumers are using less than 30 percent of the credit they have available.