The winds of change are blowing in the world of credit scores, and there are roughly 40 million consumers who may be seeing their score drop in the coming months.

As announced in January, Fair Isaac Corp. (FICO) – the creator of credit scores – is going to start scoring consumers with rising debt levels more harshly. 

While a great many won’t see a significant change (FICO estimates that 110 million consumers will see only a modest change to score, if at all), those who have a high amount of credit card debt relative to their overall credit, or who have recently missed payments, could see a more significant drop. 

The good news: the guidelines for maintaining a good credit score remain steadfast: make on-time payments, don’t carry high balances, pay them off monthly. 

The not-so-good news: life happens, and there will always be events that derail a budget. 

Purchasing Power conducted a Harris Poll in December 2019 that asked full-time employees about their unexpected expenses in the last 12 months. Among those costly surprises were the usual litany of vehicle and home repairs, medical expenses, unexpected travel for a funeral or family emergency, replacing major appliances and more. 

What was the #1 way employees paid for the unexpected over the last 12 months? 
•    Credit cards topped the list at 41%. 
•    A combined 47% either used money that was earmarked for other household expenses or borrowed from their emergency fund. 
•    16% had to take out a payday, title or other loan to cover surprise expenses. 

As we know, financial stressors like credit card debt and unexpected expenses don’t just impact an employee at home; that stress has consequences in the workplace as well. 

What can employers do to help employees weather financial storms and maintain a solid credit score? 

Voluntary benefits have a significant role to play here, and the employee purchase program Purchasing Power offers is a benefit that allows workers to purchase consumer products (like that unexpected new appliance they need) through payroll deduction when they are unable or prefer not to use cash or credit. It’s a lifeline for those who don’t qualify for prime credit, and the automatic deduction ensures employees don’t face the consequences of missed payments.

The FICO score changes will go into effect this summer, but I hope employers will take action now to provide their employees ways to meet short-term purchasing needs without compromising their long-term finances.