Key Changes to Credit Reports and Credit Scores in 2025

Introduction

• Importance: Knowing the changes in credit reports and scores is crucial to maintain or improve credit standing.

Major Changes

1. Medical Collections

• Effective Date: January 7th, 2025
• Change: CFPB blocked all medical collections from credit reports.
  • Previous change in 2024 blocked medical collections under $500.
  • Average increase: 20 points to credit scores due to this change.
• Timeline: Takes 60 days to finalize (expected early April 2025).
• Current Administration Impact: Trump Administration may roll back this ruling.
• Consumer Collections: Credit card and phone collections remain.
  • Solution: Users can use AI software and coaching for removal.

2. Fintech and Credit

• Concerns: Involvement of banks and tech industry, specifically Elon Musk.
  • Context: Musk's PayPal origins and current plans with "X" (formerly Twitter).
  • Objective: Turn "X" into a payment processor similar to PayPal.
• Alternative Lenders: Offer credit cards with lower credit requirements.
  • Examples: Petal, Tuma, and AI credit cards.
  • Advantages: Evaluate income over credit history.
• CFPB's Role: Ensures consumer protection and privacy.

3. Buy Here Pay Here Accounts

• Announcement: Accounts like Affirm to report to credit bureaus.
• Implications:
  • Positive: Timely payments can enhance credit history.
  • Negative: Missed payments can adversely affect credit.
  • Ghost Accounts: Previously unreported accounts will now show, affecting loan qualifications.

4. Mortgage Industry Changes

• Fannie Mae and Freddie Mac: Use alternative credit scores for qualification.
  • Models Used: Vantage Score 4.0 and FICO Score 10T.
  • Benefits: Includes rent and utility bills in payment history.
  • Drawback: FICO 10T's trending data analysis can be negative if carrying balances.
• Program Status: Currently on pause due to corruption in multifamily lending.
  • Reversion: Return to older scoring models (Classic FICO Score 2, 4, 5).
  • Implication: May result in lower scores for those reliant on alternative accounts.

Conclusion

• Current Status: Mixed results based on scoring models and reporting changes.
• Advice: Monitor changes, particularly with administration policies affecting rulings.

Further Assistance

• Contact: Questions can be directed to the presenter’s website.
• Engagement: Encouraged to watch future updates for ongoing changes.