February 28th, 2020 9:33 AM by Jackie A. Graves, President
The higher your
credit score, the better your chance to snag a lower mortgage rate and
potentially save tens of thousands of dollars over the life of a loan. But one
missed payment or a default can instantly bring a credit score down.
on your credit history, a 15- or 20-point shift could mean the difference
between being approved or declined or better terms or higher costs,” Rod
Griffin, the director of public education at Experian, told CNBC.
way to increase your credit score: Pay your bills on time and reduce your
credit card balance. That habit alone can improve a score as quickly as within
a few billing cycles.
rule of thumb, you could see an appreciable difference in six months,” Ted
Rossman, an industry analyst at CreditCards.com, told CNBC. However, “if a
missed payment has dragged your score down, your score could rebound in a month
or two; a series of late payments will take longer to make a full recovery,”
recovery for a late mortgage payment can take about nine months for a credit
score to recover. Filing for bankruptcy could take up to five to 10 years.
overall credit history of the borrower plays a significant role in how fast
they can recover from financial mishaps, Griffin told CNBC. But “the better
your scores are to start with, the more difficult it is to improve them,” he
adds. A lower credit score reflects a pattern of missed payments so adding one
more missed payment isn’t as significant. But a person with a clean credit
report who misses a payment will see a bigger impact, Miron Lulic, founder and
CEO of SuperMoney, told CNBC.
the goal needn’t be a perfect score, but “the goal is to have a score that
qualifies you for the best terms of rates, generally 750 or above,” Griffin
credit scores recently have been at an all-time high, according to FICO. FICO
credit scores range from 300 to 850.
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