4 Big Changes to Credit Reports and Credit Scores

“These are very significant changes to credit reports because so many people have suffered with this problem,” says Beverly Harzog, credit card expert and consumer finance analyst for U.S. News & World Report.

“Negative information about medical debt can really bring down your credit score a lot,” Harzog adds. “These changes are really going to help a lot of people boost their credit score and help them get back on track.”

2. ‘Buy now, pay later’ accounts added to credit files 

If you’ve shopped online at places like Amazon, Walmart or Target, you’ve probably been offered the opportunity to pay for your purchase in installments, through an emerging credit model called “buy now, pay later,” or BNPL. With BNPL, customers pay for purchases over several weeks or months, often with no interest. 

BNPL options provide people with payment flexibility and the appeal of no finance charges (unlike most credit cards). Nearly 100 million U.S. adults have used BNPL to finance purchases over the past year, according to a February TransUnion survey. But BNPL accounts may be classified on your credit report as short-term loans, and that can lower your score.

Here’s why: The “average age” of your credit accounts is a factor in calculating your FICO score, the gauge of creditworthiness most commonly used by banks and lenders. Each new credit obligation, including from BNPL deals, decreases the average age of your credit history. And some people are using buy now, pay later repeatedly.

The bottom line: Even if you pay a BNPL account on time, be mindful of the possible hit to your credit score.

3. Free credit reports available through the end of 2023

The economic fallout from the COVID-19 pandemic wreaked havoc on millions of Americans. Between job layoffs, business interruptions and social distancing, the past two years have been tough for a lot of people, especially older adults. 

Early in the pandemic, many lenders and creditors offered more flexible payment options, such as loan deferments or forbearances, to help people struggling to keep up with bills. The credit bureaus stepped up, too, offering all U.S. adults free weekly credit reports. (Pre-pandemic, you could get one free report from each bureau per year.)

That offer has been extended several times and now runs until the end of this year. Through Dec. 31, you can continue to request free weekly reports online.

Harzog says monitoring credit files once every few months, alternating between reports from each bureau, is sufficient for most people. 

“However, if there’s something major going on in your life — like a divorce, or you’ve had a problem with identity theft — then I would check my credit reports every week, just to keep tabs on everything and make sure they’re OK,” she adds. 

4. New emphasis on ‘trended data’

There are more than a dozen versions of the FICO score. The most recent model, dubbed FICO 10, debuted in January 2020, right before the pandemic began. 

Like its predecessor, FICO 9, FICO 10 takes rental payment history into account. Equally important, it more closely scrutinizes “trended data,” evaluating factors like balances and payment amounts over a longer period: 24 months or more, as opposed to looking at a one-time snapshot of your debt levels whenever your credit score is pulled.

FICO 8 and 9 remain the most widely used models, but as more lenders adopt FICO 10, people may see their scores rise or fall based on their debt patterns over many months or even years. It may not be enough to just pay your bills on time each month; to maintain a score at the upper end of FICO’s 300-850 range, you’ll need to manage debt wisely over time and avoid moves that can lower your score, such as maxing out your credit cards or taking on a bunch of personal loans.