Credit Scores Are Better Than Ever – Why It’s the Perfect Time to Improve Your FICO Calculation

Credit card in hand
Now is the time to work on your credit
Image Source: Flickr User Investment Zen

 

Credit scores are, on average, higher than they have ever been. If you’re coming out of bankruptcy or other tough financial circumstance, now is a good time to work on improving your credit score. Here’s a look at why credit scores are on the rise and what you can do to improve yours.

Recent Change to How Certain Debts Are Reported

This month, a change went into effect on how public records, judgments, and tax liens are reported to the three credit bureaus – Experian, TransUnion, and Equifax. Many consumers saw an effortless boost to their credit score because the three reporting bureaus cleared some items in question off their reports. In the past, creditors, debt collectors, and tax agencies were able to report certain negative items onto consumer credit reports with inaccurate, missing, or minimal information. Once this sloppy practice was disallowed, millions of consumers saw a boost to their credit score.

Information on Your Credit and How Scores are Calculated Is Everywhere

For a long time, it was a hassle to get a look at your credit report or to see the credit score calculated from the reported information. Today, though, there is a wide array of resources to help you get educated on the algorithms used to calculate scores and to see what’s on your credit report, and how to clean it up where possible. Free credit score services proliferate, so it’s not costly to get the information you need to work on your credit score. With easy and helpful info at hand, consumers have been able to get their hands dirty and work to improve their FICO score.

Negative Items Are Falling Off Daily

The most recent recession crashed home values in 2008 and saw a spike in foreclosures that peaked in 2010. As of this year, many of these negative items from the worst financial crash in recent history will fall off your credit report if you had collections actions and a foreclosure in 2010 or prior. After seven years of inactivity or account closure, items come off your credit score. However, you shouldn’t trust that this will happen organically. Educate yourself on when items should come off and check to see that they do. Seven years from the date of your last payment or use of a credit line is the threshold.

Comparison Credit Shopping Is Now Easier

When you’re shopping for an auto loan, mortgage or credit cards, you might apply to several different creditors, and if each runs a hard pull, this can lower your credit score. Ironically, lowering your credit score by applying for credit can then make you less likely to get preferable interest rates. Increasingly, many lenders allow a soft pull rather than a hard pull during the evaluation process. By getting a peek at your credit profile, creditors can let you know if you’re likely to be approved and, if you are, what your interest rate will be. This can protect your credit rating while getting the information you need.

It’s Never Been Easier to Improve Your Credit Score

If you’re coming out of North Carolina bankruptcy and looking to improve your FICO score, the time has never been better. There is a lot of information available to help you understand your credit report, learn which information on your report more heavily impacts your credit score calculation and see how to strategically improve your score month after month until you have the credit score you need to meet your financial goals. Good credit doesn’t just happen – it’s something you must pursue.

To find out more about increasing your credit score after bankruptcy, contact Credit Score Keys.

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