Back in June a new credit scoring model was announced, but the rollout date was not supposed to be finalized for sometime. It's looks like we are quickly approaching that time and here's what we know thus far.
1. Scores will still range from 300 to 850.
2. It will still take into account the same factors as before, such as timely payment history, length of credit history, amount of debt, and ratio of debt available to credit.
3. The big changes include: Authorized User's. An individual will no longer get credit (receive an increase) in their own credit score as the result of being an authorized user.
4. Some will see a slightly higher score if they have minor blemishes, ie. one late payment, whereas before they were severly penalized for this. Other's who have consistent blemishes, may see a drop in their score.
5. The new model will also score based on the credit mix or blend. So, a person who has a mortgage loan, an auto loan and credit cards, will fare better than someone who only has credit cards.
There are both pro's and con's to this new model. But it just goes to show that the industry is ever changing. If you're always ready, you don't have to get ready. Prepare now for the upcoming changes.
Cecelia Marlow - Senior Mortgage Consultant - PanAmerican Mortgage, LLC (773)782-6000
www.ceceliaknowsmortgages.com
www.blogtalkradio.com/ceceliaknowsmortgages
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