Hello, everyone and welcome back to a new video shawn's, a name and today we're going to be talking about four major changes that are coming to every single person's credit reports in the united states and, first before we actually dive in. I want to mention that your credit score is actually a direct representation of how not only you're doing financially but how everyone else in the country is doing financially because, essentially, as the scoring model works, there's only a small percentage of people who can be above an 800 there's another amount of percentage of people who can be in between 750 to 800, 700, 750. Basically, there's a percentage of people that falls into buckets and that's how the scoring model works. It's not necessarily hey you've had this many accounts for this long.

That means you have an 800 credit score. No, it's basically taking into account how you're doing in comparison to the guys sitting next to you. So if everyone in the country is doing phenomenally well, when it comes to managing their finances and having their debt extremely low, then it's going to be that much harder to have a good credit score and then also the reverse is true. If a lot of people in the country are basically racking up tons of credit card debt aren't making the most financial you know savvy decisions, then it's going to be a lot easier to have a higher credit score.

So knowing these things are going to put you in a better position than the guy sitting next to you, so what are these four things that we're going to be talking about today? Well, i'm actually going to be referencing an article written by lynette calafani. Hopefully i pronounce that correctly anywho. These four main changes are in regards to medical collections, which is the biggest, and i can't wait to talk about. We've got medical collections, we've got buy now, pay later accounts, we've got access to your free credit report and then lastly, it's going to be something that probably won't impact too many people, but it's essentially how your rent history gets impacted when it comes to your credit Report i'm going to save the best for last with the medical debt we're actually going to skip that one, because that's one i want to touch the most on and the first one i want to talk about is actually the buy now pay later account.

This is big, so what exactly is a buy now pay later account? Well, you've been seeing these pop up all over online lately, but it's essentially when you go to buy something, that's a little bit more expensive than what most people are comfortable paying out of pocket. Let's say a product's 400 500 600 and you don't necessarily have all of that cash to pay for right now now you could either put it on a credit card or you can do what most of these retailers are doing and they're using these buy. Now pay later accounts things like affirm, we actually use it at direction desk. You can basically make installment payments on what you are purchasing and the reason they're so popular is because someone can finance, let's say a 300 product and they can say, hey, i'm going to make monthly payments of 50 a month until this thing's paid off and a Lot of these actually don't come with any financing charges, so it's actually a relatively cheap way to purchase something the problem nowadays, that's actually going into effect is that these buy now pay later.

Loans are going to be actually showing up on your credit report. Now some people would say: hey sean, that's great. If i'm going to make all my payments on time. That means that i'm going to build up my credit history, i'm going to have more loans that i pay on and basically pay off, and yes, you're right in regards to you know if you make your payments everything's going to be good.

If you miss your payments, you're obviously going to have a big deal with late payments, showing up on your credit report and making your score go down. But the bigger issue is the fact that a lot of these are like five months six month, maybe eight months, i've seen a max of like 10 month terms on them and when you have a bunch of little loans that don't have too much payment history on Them it's actually going to negatively impact your score because you're going to be seeing hey, i'm going to do this, buy now pay later product. I'm going to buy this! I'm going to buy this, i'm going to buy that one buy that! Let's say you buy! Five of them in a year and you've got all these little four month, five month six month, long loans, it's going to look like you're opening and closing accounts very quickly, and that is not seen in a good light with a credit bureau. This is basically decreasing.

The average length of time with a specific creditor and again that's not good for your score. So if you do a buy, now pay later type of account very rarely, then it's probably not going to impact you. But if you like to use that a lot just be wary that your score is most likely going to be taking some dips as these effects go into play, which, by the way, all of these things, i'm going to be talking about today, will actually go into Effect on july 1st of 2022, of course, the next change is actually the fact that you can still get a free credit report. So when coven 19 came out uh, basically the credit bureaus and all the you know, the world apocalypse basically happened and said: hey look.

I know the world's going crazy we're going to give you access to a free credit report, while all this is going on just because there's so much forbearance and deferment and all of this freeze on the financial world of what's going on, and they wanted to make Sure that consumers had access to their credit reports to know what's actually going on so the good news is, you can still get a weekly free credit report from the bureaus right now, whereas usually it's just limited to one a year. So take advantage of that, i think that's going to be extended all the way to the end of 2022. So if you want to check what your credit score is - and you know you you don't want to pay for it - you can go, get a free credit report from the bureaus once a week. Most people probably don't need to get a credit report every week.

You probably need to get one like once every other month, i would say, but it's cool, that you have the ability to go, get a free credit report until the end of the year. The next major change, though, is the fact that credit bureaus are going to be basically putting more emphasis on what's called trended data. Now this is going to hurt actually most people and the reason i say that is because you know i see a lot of credit reports doing mortgages and while most people, when they come to me, they've kind of gotten, their finances aligned right, they're gearing up to Buy a house - and they typically will make sure that they're not missing payments and that they're in a good financial situation to purchase a house. Well, trended data is going to hurt most people because it's not necessarily a hey.

How are you doing at this point in time? It's basically hey. How have you been doing over the last 24, maybe even 36 months. So let's say you missed a car payment uh two three years ago and you missed payment. You got man, i was going through some stuff, i i had a medical, you know emergency or something, and i wasn't able to make that payment.

But that was two three years ago and now i'm i'm good to go. I'm basically haven't missed a payment. My finances are strong, all that good stuff. It's basically stating that that late payment that was years ago is gon na still be dragging down and impacting your report for a while, and that's the thing that sucks a ton, because everyone makes mistakes.

It's not if it's when and when you make that mistake. Typically, if you can build up some good credit history to kind of hide that you can still get your score pretty high until that eventually falls off your report, problem is now it's going to be. Basically, sticking with you for a while, but then on the flip side. Let's say you don't use a whole lot of credit.

Let's say: you've got like one loan and maybe one credit card. You don't you're, not too diversified, but you literally have never missed a payment. You never overspend and your finances are strong. Well you're, probably going to have pretty good credit, because it's going to pull in all of that history, the problem is most people just don't have that.

So it's going to be interesting to see how scores and how reports. Ultimately, change with a bigger emphasis on trended data. Okay, now the last point - and it's the most important one of the list that i'm actually stoked for, because it's going to make a very positive impact on most people's credit reports - is the fact that medical collections are going to have less of an impact. On your credit score now i have seen this time and time again when i'm looking at credit reports, it's pretty insane that someone can have insanely good credit.

I mean their experian and transunion trade lines. Let's say, for example, are 800 like really good and then equifax, for some reason is the only bureau that has this one super old collection that was paid years ago, but it's super old and it's on there that score could be like a 650. So you've got like 800s with these other two and then a 650. Because of that one super old paid medical collection, which is usually like a medical office who sent you a bill in the mail and no one checks the mail and you never got it.

And then all of a sudden you're, like oh my gosh, i have like some weird collection. I'm getting all these notices for. Let me pay it real quick. Is this stupid, 50 copay and then you pay it and your credit score is still super low because it was sent to collections absolutely dumb and that's why i'm stoked for these changes? Because if you have a medical collection, so it goes to the collection agencies and you pay that medical collection.

It will no longer show on your credit report, which means it'll no longer drag down your scores and in addition to that, you are now going to be getting a full year to work out any sort of medical billing issue. So again, in the scenario like i just explained: if you get a bill and you missed it or something because it was in the mail in the doctor's office, is literally dated back in the 70s and they're so old school. They can't just send you like an email bill. What's the issue there, but they mail, you a bill and you don't get it right and you don't pay it and then they're, calling you and they're trying to get things sorted.

You have up to a full year. Now, before it actually gets sent to collections and shows up on your report, this is twice as long as it currently is. Okay, so right now it's six months. It's going to be going to a year, that's awesome and should really limit how many actual medical bills make it into collection, but wait, there's more now little icing or cherry on the top, which is pretty cool, and this actually doesn't go into effect until the beginning Of 2023, but essentially, if medical debt or collections is under 500, it will not show up on your credit report.

This is awesome because, again, just like the example i gave, most people can pay a copay and it's usually a billing issue or honestly. In most cases, it's the doctor's office who just has terrible medical billing staff, who doesn't let you know that you actually have a copay or that you actually have an outstanding bill. So if it's under 500, it can't even be reported to the bureaus, which means your credit score, is not going to be negatively impacted for something that you could have paid now. You will still get sent to collections for medical bills that are over 500 dollars.

You know those are things like your surgeries and your other bigger items that, if you you know, can't pay you're still going to have to pay those and they're still going to go into collection. It's mainly designed to omit all of the errors or the little annoying things that really drags down people's scores for no reason at all. I can't even tell you how many credit reports i've seen from some super financially savvy people, but they've got some stupid old medical collection that drags them down for literally no reason. So i am beyond stoked that these changes are going into effect and it has been something that has been much needed for years and years and years.

But really i mean those are the four main changes that are gon na, be coming to credit scores and credit reports in general moving forward, i'm really stoked, because it's gon na basically shake up everyone's scores if you've been like. Oh i've been sitting at a 760 forever. Well, your score might drastically change. Maybe it boosts up to a 780.

Maybe it goes down to 740 everyone's across the board is going to be updating over the next year or so, which is awesome. More data and changes to the scoring models are great when you actually know what's going on, and you do now that you're watching this video, because the more you know the more you're able to play into those strengths to make sure that your score is going to Be better than the guys sitting next to you, so hopefully this video has helped you. Hopefully you kind of know what to expect moving forward and you can make sure that your credit score is in the upper half versus the bottom half. If you enjoyed the video, please hit that like button, please drop me a comment down below of what you think about these changes and share the video with a friend who needs to get their credit score right.

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