In the last few months rates have increased more than 2% and that can cost you a lot more in the long run when purchasing a home. Add to that the fact that lenders add in more things the lower your score is - remember they are deciding on the risk they are taking that you will be able to pay back the loan, and pay off the home.
If your FICO score is under 740 you need to take a look at the article that CNBC posted up on Thursday.
They even cover 5 ideas on how to improve your credit score.
The article is called: Mortgage rates are rising. Here’s why your credit score matters and 5 ways to improve it
Link to the article: https://www.cnbc.com/2022/04/14/heres-why-your-credit-score-matters-and-how-to-improve-it.html
Last week it was announced that there are some big changes coming to how medical debt will be reported on your credit, and many scores will be going UP because of it.
In fact nearly 70% of medical debt will be removed.
Here are the big changes:
July 1, 2022 paid medical debt will be removed from scores. That's important because for many it will remove late payment marks against them.
Credit reporting agencies will wait for 1 year (instead of the current 6 months) to report it on your credit. That can give a person more time to pay the debt instead of showing the collection.
And in 2023 none of the agencies will be reporting any medical debt under $500
Here is their statement. Equifax, Experian, and TransUnion Support U.S. Consumers With Changes to Medical Collection Debt Reporting
If you have a low credit score, or no score and a family member or friend with good credit piggy backing may be an option. In the simplest form it means you "piggyback" on their credit, by becoming an authorized user of their credit, for example a credit card.
This is often seen as a traditional way to build credit, but there are some things to know. For example if the credit isn't being reported, it's not helping you.
The article also goes into some of the dangers like opening yourself up to identity theft, and the misuse of "credit companies" connecting strangers.
If you have a trusted family member or friend, and they trust you too, this can be a great option to help get you started on the right track. It can take some time for it to show up, and is not an immediate fix. Also there are things to consider like keeping the debt under that 30% mark of use.
For a full article looking at how Credit Card Piggybacking works read the following article on TIME,
Credit Card Piggybacking Can Help You Build Your Credit, But You Need to Be Careful, from their NextAdvisor Partnership. It's about a 7 minute read and has a lot of details, pros and cons.
Link to the article: