At a time of record-high borrowing costs and rising prices, people need all the help they can get from their credit scores. Some people might get a surprise boost — if they have student loans poised for forgiveness under President Joe Biden’s executive order wiping away federal student-loan debts up to $10,000 and, in some cases, $20,000.
TransUnion — one of the country’s three major credit reporting agencies alongside Experian
EXPGF,
+1.82%
and Equifax
EFX,
+2.59%
— recently ran a simulation digging into the potential credit-score implications of Biden’s student-debt cancelling executive order. Here’s the upshot: TransUnion ran its simulation over five scores — from a “subprime” range of 300-600 to a “super prime” range of 781-850. Most people stayed in the same credit-score range they already occupied even after subtracting the $10,000 debt. However, TransUnion concluded that an average 88% of consumers remained in the same of five “credit risk tiers” when the researchers looked at a person’s credit score at a “static,” single moment in time. In a “trended” approach that wraps into numbers over several months, 79% stayed where they were.
“TransUnion ran its simulation over five scores — from a ‘subprime’ range of 300-600 to a ‘super prime’ range of 781-850. Most people stayed in the same credit-score range post-debt cancelation.”
Forgiving $10,000 of hypothetical student debt pushed 9% of those consumers in the …