With much anticipation surrounding new credit scoring algorithms in the US, experts agree that most consumers will see a hike in their scores across the three bureaus; Experian, TransUnion and Equifax. The 202-page bill, the Comprehensive Consumer Credit Reporting Reform Act, (H.R. 5282) was passed in an effort to more accurately measure credit risk, the new models will focus on trended data and repayment history, while culling the less reliable information. Much of today’s errand reporting results from public records that can be less accurate and difficult to link to individual consumers.
By eliminating this public records data, civil judgments such as tax liens for example, will also be removed from consumer credit files.
In addition, medical collections will no longer burden the new reporting models. With countless consumers confused by the insurance billing process and which party is responsible for what portion of the payment, collections will not be reported until they’ve reached a much more mature period. A recent report by the Consumer Finance Protection Bureau outlined many insufficient quality control systems and a number of problems with how the bureaus are currently reporting those important 3-digit credit scores.
What does this mean for you?
Some experts believe it could boost individual credit scores by as much as 40 points or more. Credit history and scoring is among the most important qualifying component when seeking approval for home mortgage financing. Your credit score dictates everything from the amount of money you can borrow, to your interest rate and repayment terms. In many cases, a 40 point swing in credit score will mean the difference in whether the applicant is approved or denied home loan eligibility.
For more information, email the credit and home financing experts today at American Liberty Mortgage. Take control of your financial future and prepare for this unprecedented opportunity to qualify for a low interest home mortgage.