Changes in the way credit scores are calculated are a big deal, because they are used to determine how much you’ll pay for a mortgage, a car loan, car insurance, and much more. So, when changes to the way credit scores are calculated were recently announced, we immediately wanted to get information to our readers.
Credit Score Calculations Are Changing in 2017
According to CNBC, changes this year regarding the way credit scores are calculated will impact almost everyone with a credit score. The changes are slated to take effect July 1, 2017 by VantageScore, a firm created by Experian, TransUnion, and Equifax.
Here are some things you should look for, as the new credit score calculations roll out. But make sure you don’t act upon them until you know exactly how these items may affect your credit score.
- If you carry a balance on a credit card, you could be better off or worse off, depending on how you pay it off. New credit score calculations will take into account the trajectory of a borrower’s debts on a month-to-month basis.
- If you have a lot of available credit, your credit score can be negatively affected by the new calculations, because they could potentially run up debt quickly. This change would hurt people who have multiple high-limit credit cards with a lot of available credit, which is a major difference in the way credit scores are currently calculated.
Furthermore, USA Today highlighted information that borrowers with a low credit score may benefit from the removal of civil judgments, medical debts, and tax liens as factors in calculating credit scores.
What can you do to improve your credit score now?
You’ll have to wait to see how your credit score will be impacted by changes in credit score calculations. However, there are a few things you can do now to improve your credit score.
- Check your credit report for any mistakes and correct them.
- Use credit, and different types of credit.
- Don’t apply for new credit unless it is absolutely necessary.
- Keep balances low.
- Don’t close your old, unused credit accounts.
- Pay your bills on time.
Marimark Mortgage is based in Tampa, Florida, and serves the mortgage needs of homebuyers and homeowners in Florida, Virginia, and Pennsylvania.
We specialize in conventional home mortgages, FHA, VA and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing, and help clients with HARP refinancing to lower their monthly mortgage payments.