New FICO09 May Be Coming to Town,
Later this year, if all goes well, mortgage lenders may have the opportunity to transition to the new FICO09 system. These changes are a very welcome relief for millions and millions of consumers who are just 30-50 points away from qualifying for homeownership.
After the recession in 2007, almost all lenders were regulated into firming up home mortgage loaning guidelines. Some lenders made internal company changes to their loaning guidelines with even tougher qualifying debt to income ratios and credit score acceptability. This was making it nearly impossible to obtain a home loan regardless of your common and average ability to pay back the debit. Only the best of the best borrowers were approved for a home loan. Well, things might be changing soon.
With FICO09, don’t expect your negative credit to be magically erased. It will still follow you but with less negative impact. Any credit collection accounts on a buyer’s credit report will still remain for 7 years even if it’s paid off. However, the way this negative impact is viewed by the lenders will change if FICO09 is adopted.
The bottom line is, if FICO09 is implemented by lenders, any paid or settled collection accounts are not mathematically considered when calculating your home purchasing power via your credit score. More great news!...unpaid medial collection will have less negative impact as well when trying to qualifying for a home loan.. Over 64 million consumers have some type of negative credit from medical collections. Over 100 million consumers have negative credit from simple collections accounts. These negative impacts greatly reduce the ability of the consumer to own a home. With FICO09 changes, millions of people will be able to buy again or for the very first time.
Let’s hope that VA, FHA, Fannie Mae, and Freddie Mac will adopt these changes fast…because “There is No Place Like Home”.
Linda Ring
Century 21 Award San Diego
(619) 251-5202
Comments(0)