If you’ve been working to improve your credit, I have good news. Your credit score might soon be getting a boost, thanks to a change in the way credit scores are calculated. Read on to see how this can help you reach your financial goals.
A high credit score can be the key to a better life. The higher your credit score, the more likely you’ll qualify for low-interest rates on mortgages, cars and other forms of credit. If you’ve been thinking about buying a house, a higher credit score can improve your chances of qualifying for a mortgage. By raising your credit score a few percentage points, you can save thousands of dollars in interest over the course of your life.
The good news is your credit score may soon automatically increase, thanks to a change in the way credit scores are calculated.
You’ve probably heard of FICO scores, which are used by 90 percent of lenders to make lending decisions. Starting in 2019, a new score called the UltraFICO score will be available, which may lead to higher credit scores for many Americans.
UltraFICO scores are different than traditional FICO scores because they take into consideration not just your credit history, but also your banking history. If you’ve had a bank account for a significant amount of time and you save regularly to that account, you could see your credit score rise. If you’ve been rebuilding your credit or you’ve made financial mistakes in the past that have led to a drop in your score, this could be a game changer.
According to Experian, FICO, and Finicity, the companies behind the new score, the UltraFICO score could improve the credit of most Americans. Those who currently have credit scores in the upper 500s to lower 600s may particularly see a welcome boost.
So how can you take advantage of this new information? While the new score won’t be widely available until next year, there are steps you can take today to ensure that your score will be as high as possible.
Keep a budget. The last thing you want to do is overdraw your bank account since that can lead to a lower score.
Create a cash cushion. Give yourself some breathing room by putting a little extra cash in your checking account, which will be there in case you spend more than you anticipated.
Build your savings. One of the factors the new credit scoring model will look at is whether you are a regular saver. Not only does saving put you in a better financial position, but it can help you get a higher credit score.
With a possible boost to your credit score, now can be the time to get serious about your financial goals such as buying a house. Contact HomeFree-USA today to learn more about improving your credit and see how we can help you make your financial dreams come true.