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FICO Scoring More Lenient on Small Missed Payments

By
Real Estate Broker/Owner with Broadpoint Properties Cal BRE #01324959

With so many folks participating in short sales, loan modifications, and even foreclosures, you've got to wonder about the long term impact that decreased FICO scores will have on our economy. I've met many borrowers who are extremely concerned about their credit score (and rightly so). Many are so concerned that they borrow money (even on a credit card) in order to continue to make those on time monthly mortgage payments.

While I cannot speak to the exact percentage of decline in the average FICO score, I'm certain that the decline has been significant. That being said, how will our nation's long term inability to qualify to purchase cars and homes (and to qualify for credit, in general) impact our economy? What will happen, for example, when very few people will qualify to purchase cars? How will that affect the auto industry, for example, and our national economy in general? This is something that is on my mind all the time.

With that being said, according to MarketWatch, FICO 08 has been creased to allow for more lenient scoring on small missed payments. To become more familiar with FICO 08 or to learn more, click here.

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Comments (2)

Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Melissa:  I totally understand your concern, and that is a concern for all of us.  I am guessing, though, that if what you fear does continue to happen, some sort of exterior insuring agency will crop up to protect the various lenders from loss.  They will charge a fee to the lender, who will of course, pass it on to the borrower as a cost of doing business... just as is done presently.

Sep 27, 2009 07:55 AM
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"

Melissa - This is a great reference.  Also, perhaps it is a step for FICO to start considering that a huge portion of the population have lost jobs and income, thus missed LARGER payments, like mortgages....  One would hope that those who took the hit won't suffer with 150 to 250 point drops for years to come.

Sep 27, 2009 08:18 AM