Finally, credit scores for the masses are rising, giving a credit score boost and you had little to do with it.
Several major credit reporting agencies had been reporting negative credit information in the past. The recent change is now prompting millions of consumers’ credit scores to rise. As a result, collection events have been removed from over 8 million consumers’ credit reports in the 12 months ending in June 2018. That’s a HUGE overhaul.
The New York Federal Reserve reported Tuesday, August 14, 2018, that consumers who had at least one collections account removed from their credit reports are seeing an 11-point increase in their scores. That is extremely good news! That could mean the difference between affording a home or not for many families.
Millions of Consumers Getting a Credit Score Boost
The majority of consumers who benefited from the recent changes are those who had credit scores below 660 before the collection events were removed, according to the New York Fed.
This is good news for potential home buyers, as better credit scores factor big in how mortgage lenders use those credit scores in granting cheaper rates for mortgages.
And even a relatively small shift in scores can make a big difference on loan affordability.
You may want to read my blog: How to Fix Your Credit in 6 Easy Steps!
As you can see, with this boost, a few simple steps can greatly improve their credit. Imagine how raising your credit scores from “fair” (580-669) to “very good” (740-799) and could potentially save you $29,106 in mortgage costs.
Why This is Good News for You
Many credit reviewers have long claimed such dents to credit scores are prone to errors, and as a result, those otherwise deserving have been unfairly kept many out of the borrowing market.
The good news is that Equifax, Experian PLC, and TransUnion have all agreed to revamp credit reports, which is the result of a 2015 settlement with state attorneys general on the matter. In the settlement, the firms agreed to remove some non-loan related items that were sent to collection firms, such as gym memberships, library fines, and traffic tickets. They also agreed to strike medical-debt collections that have been paid by a patient’s insurance company.
What Are My Next Steps?
If you have had trouble getting a mortgage loan approved in the recent past, now is a good time to review your current situation and see where you stand.
You may be wondering if it is even possible to get a mortgage after experiencing a distressed situation. The answer can be yes, but it depends on meeting certain goals.
Because not all financial situations are the same, your mortgage lender is able to offer advice on what you need to do to correct any problems and get you to where you want to be.
You may want to read: How soon Can I Buy a Home After Foreclosure?
If I were you, I would get an updated copy of my credit report and check it for accuracy.
You can get a free copy of your credit report here: Annual Credit Report
Now that you are more creditworthy, let’s get you into that new home.
When you are ready to go home shopping, my office is ready to help you.