Monday, February 3, 2020 / by Ryan Huemmer
Amber uses Credit Karma to monitor her accounts and score........it's FREE!
This comes as total household debt in the U.S. is on the rise and currently sits at about $13.95 trillion as of the end of 2019, according to the Federal Reserve Bank of New York. That’s higher than the previous high of $12.68 trillion seen right before the 2008 financial crisis.
Those who fall behind on their loan payments, they are more likely to see a drop in their score. FICO also plans to flag consumers who sign up for personal loans, which are generally considered more risky since these are unsecured and typically do not require collateral like a car or a house.
The new scoring model will also likely create a wider gap between those who are considered good credit risk vs credit risk. Consumers who already have good credit; those with a history of timely payments and low balances. But those who score below 600, considered a credit risk when it comes to getting loans, will see bigger dips in their scores under the new model.
Regardless the major factors that your score is built on are:
1. Payment History
2. Credit Utilization
3. Length of Credit History
4. Credit Types
5. Recent Inquiries
It may take a while for consumers to notice as changes happen slowly with credit monitoring updates.
Your credit score is the most important indicator used to see what loan programs you qualify for. We prefer Creditkarma.com for a credit monitoring system. It's free and doesn't require a credit card sign-up. You can request score updates every 7 days and the request doesn't count against you as an inquiry.
When you're considering buying a home or even selling a home, make sure to know your credit score and how your score will impact the process of home ownership. Call one of the Top Real Estate Teams in Madison and get one of our Realtors on your side.
The Huemmer Home Team
425 W Cottage Grove Rd Ste B
Cottage Grove WI 53527