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Why Credit Scores Might Jump in July

Good News If You’re In The Market For A Mortgage

If you’re thinking about buying a house this year, listen up! Your credit score might jump in July, and that’s a good thing if you’re looking to obtain a mortgage.

Why are scores going up?

Starting July 1, the country’s three major credit-reporting agencies are changing the way they calculate credit scores, a move a that will boost certain consumers’ credit scores.

The agencies – Equifax, Experian and TransUnion – currently rely on information from public records regarding tax liens and civil judgements, but sometimes one person’s score is mistakenly calculated using another person’s information, usually due to multiple people having the same name. So to improve accuracy, the agencies will stop listing information from liens and judgements unless they have specific personal data that reinforces the connection.

The new reporting methodology will apply to existing and new records and will likely improve credit scores that took a hit from incorrect reporting. According to FICO (the company that computes scores), about 12 million people will see an increase. Most of those people will see a rise of around 20 points; however, a smaller portion may see a bump of 40 points or more.

What this means for you

If you’re looking to buy a house, a good credit score is essential. Lenders decide who receive mortgage approvals based largely on your credit score. Since credit scores are determined by a number of factors including liens and judgements, payment history, debt load, and credit history, a higher score shows them that they can trust you to handle money responsibly.

Whether or not you see a jump in your score in July, if you’re interested in purchasing a home, Pacific NW Ironworkers Credit Union and our mortgage partner Consolidated Federal Credit Union will help you through the mortgage process. Contact our home mortgage specialist, at the credit union 877-769-4766 for your free loan review or to get a free loan pre-approval before starting your search.

 

 

 

 

 

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