The most widely-used credit score in the country is getting an update, which will probably ease the lending process for millions of Americans, according to a recent report in The Wall Street Journal. Fair Isaac Corp. (FICO) announced last week that it will no longer include records of consumers failing to pay a bill if the bill has been paid or settled with a collection agency. FICO credit calculations will also give less weight to unpaid medical bills with collection agencies.

The alterations come after months of talks with lenders and the Consumer Financial Protection Bureau, and are expected to allow millions of Americans access to credit previously unavailable to them. The aim of these changes is to boost consumer lending without creating additional credit risk.

The CFPB has criticized credit-scoring models for putting too much emphasis on unpaid medical bills. The organization argues that “medical debt is inherently different from other forms of debt because consumers are often unaware of what they owe to hospitals and doctors,” according to the article.

Lenders use FICO credit scores in about 90 percent of consumer and mortgage loan decisions, according to the report. However, the changes are unlikely to affect mortgage lending right away.  The new score model will probably be adopted by auto-lenders and credit card companies first, while banks and other lenders will most likely lag as they tend to use older FICO score models.

While change may come to the mortgage industry at a slower rate, the new FICO scoring method should help both commercial and residential borrowers who had trouble accessing credit. Borrowers could have more options as the new FICO scores come into effect, so mortgage brokers would be wise to keep up with these changes.

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