Use the next 30 days to improve your credit score. You’ll get a better mortgage rate quote.
Credit scores are probability statistics. For mortgage lenders, they predict the likelihood of a homeowner missing three consecutive months of payments, which puts the loan into default.
And, because credit scores are just probabilities, their outcomes can change over time.
Whether your credit score is excellent or terrible, a change in your spending patterns changes the likelihood that you’ll miss three straight months of payments, which forces your credit score to change.
Your spending patterns are grouped into 5 main areas:
- How you’ve paid on your debts lately
- The amount of credit you have available in an emergency
- Your years of experience managing credit and debt
- The types of credit currently available to you
- Your recent patterns in signing up for new credit accounts
The five areas are the building blocks of your credit score and they’re applied to a timeline because lenders know that if you exhibited good credit behavior yesterday, you’re likely to exhibit good credit behavior tomorrow.
It’s Newton’s First Law of Motion: an object in motion tends to stay in motion. It’s inertia. And, it’s why improving your credit score is sometimes as basic as getting your bills (more) caught up and being smart about how you spend.
It’s also why your credit behavior of the last six months has an outsized effect on your credit score: what you’ve just done has a lot to say about what you’re about to do.
Commit to improving your credit score and, as different spending patterns emerge in your credit report history, your FICO score will reflect them. You’ll get access to a wider selection of mortgage programs, and lower mortgage rates overall.
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An insurance claim is an official request you make to an insurance company, asking to get paid for damages. Insurance claims can be made for any reason that’s a part of your insurance policy. When you have homeowners insurance, you can make an insurance claim after a fire in your home; after there’s been theft […]