If you haven’t checked your credit score recently, maybe you should. According to an analysis performed by VantageScore, around 8% of Americans are seeing a bump in their scores with an average 10 point increase as new credit rules role into effect that remove civil debts and certain tax liens from credit reports.
Overall, the average FICO credit score for Americans is 700 which is the highest it’s ever been. Many experts agree that 700 is really good, with scores ranging from 300 – 850. For a long time, since the housing crisis, credit scores have been sitting right around 686 as confirmed by Ethan Dornhelm – vice president for scores and analytics at FICO.
So, what do these new credit reporting rules mean for you? Well, despite the potential boost in score and all that it entails, the expectation is that personal credit reports will have improved accuracy. Major reporting agencies (Experian, Equifax and TransUnion) will now be required to update files a minimum of once every 90 days and new entries will need to include name, address, birth date and social security number.
Better credit scores may mean better rates and terms for most potential borrowers seeking a mortgage loan. To be sure you are setting yourself up for the best loan terms possible, make sure to do the following:
1. Check your credit report
Your score may have increased, so it’s good to check. Also, comb your report to confirm everything is correct.
2. Make all payments on time
One late payment could have a significant impact on your score.
3. Don’t spend the max limit on your credit cards
Many financial experts advise credit cardholders to spend no more than 30% of their limit.
4. Decrease debt
Your debt-to-income ratio has an effect on your score, so pay down any debts as fast as possible.