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Is your credit score going up?

    

SUMMARY: It's a good idea to check your credit score from time to time to make sure you get the perks you deserve.

Now that many financial institutions will let you check your credit score for free, it makes even more sense to keep an eye on your credit's health.

 

credit scoreAfter all, a good credit score can help you qualify for low-interest loans, get lower car insurance rates and avoid security deposits for your utilities. Some employers even use credit scores to help them hire responsible applicants.

If you keep an eye on your credit score, you may noticed have recently that your score got a small boost.

Why Did Some Credit Scores Increase?

In April 2018, all three of the major credit bureaus (Equifax, TransUnion and Experian) stopped included tax liens in their credit reports. In other words, if the government put a lien on your property because you failed to pay your taxes, that information won't appear on your credit report anymore.

The companies did this after getting pressure from Consumer Financial Protection Bureau (CFPB), which found that some of the tax liens included in consumer credit reports were outdated or incorrect. Much of the lax lien information came from public databases, which don't always get updated as often as they should. As a result, some credit reports contained inaccurate information that negatively affected consumers.

Obviously, the higher ratings are good news for people who have had problems paying their taxes on time. Unfortunately, you shouldn't expect to see a significant difference in your credit rating. Experts believe that the change will improve affected credit scores by 10 to 20 points.

How Much Will the New Credit Scores Benefit Consumers?

An extra 10 to 20 points won't make a huge difference to most companies looking at your credit score. It could help you quite a bit, though, if you're just below a good score. For instance, if you currently have a credit score of 665, a 10-point increase will take you from the "fair" category to the "good" category.

The bad news is that few people affected by the change have decent credit scores. Consumers with tax liens usually have bad credit ratings because they also tend to miss payments and pay bills late. Generally, they're not financially responsible people who have enough money to pay their taxes, so they're also not good at paying their debts on time. Adding 10 or 20 points to a fair credit score of 665 might matter. Adding those points to score below 650, however, doesn't mean much because the new score is still poor.

More Bad News: Your Credit Score May Drop Soon

If your higher credit score benefits you, try to take advantage of it as quickly as possible. According to at least one credit bureau, tax liens will get added to consumer credit reports as soon as it can find a way to prove their accuracy. Remember that the tax liens were only removed because of inaccurate reporting. If companies can find a way solution to that problem, then the tax liens will become part of your credit report again.

Credit scores play an important role in your financial health. Regardless of whether your score went up recently, you should check your credit report once a year for mistakes. In fact, you should request a copy of your credit report from all three bureaus to make sure they're accurate. The federal government requires each bureau to give you a copy of your credit report if requested, so you won't have to pay anything to review your information.

Sources:

https://www.khou.com/article/money/magnify-money/your-credit-score-might-get-a-boost-soon-heres-why/507-546038894?utm_campaign=trueAnthem:+Trending+Content&utm_content=5ae2033e04d3013054d019d6&utm_medium=trueAnthem&utm_source=twitter

https://www.thebalance.com/having-good-credit-score-960528

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