New Credit Score Rule Is a Game Changer For Borrowers!
Let’s say you’re a perfectly responsible, middle class adult who’s been paying your rent on time for 5 years and never took on any debt. Good for you! Unfortunately, you may have realized that you may have a harder time getting a loan because of the simple fact that you don’t have any debt. Seems backwards right?
I was in a similar situation. I had to open 2 credit cards and get a small $2,500 personal loan just to establish any sort of credit! Although this worked like a charm, it doesn’t seem to make a whole lot of sense. However, there are some major changes coming that could seriously change your entire home buying situation!
Who am I?
My name is Greyson Roberts, a Realtor and owner of BOSS Properties. I am extremely excited to share today’s video with you because this will be the first major change to the FICO credit score system in two decades. This will help people like me and you be able to qualify for more real estate! If you’re looking to buy, sell or invest in the greater Springfield, MO area, don’t hesitate to give me a call. I’d be more than happy to help you with all your real estate needs.
Let’s get into these changes and how they work. First of all, over 10 MILLION additional people could be able to qualify for a home loan with these adjustments. The Federal Housing Finance Agency announced that they will be requiring mortgage lenders to incorporate a new version of the FICO score.
New FICO scoring model
Here’s the gist of it. The new FICO score will actually include information about a borrower’s utilities, rent and phone payments. This is massive, because I’ve always thought it was strange that if someone were paying $1,200 in rent, that doesn’t mean they would qualify for a $900/mo mortgage payment. However, now, banks will be required to take these categories into consideration. This is great news!
This simply will result in more borrowers that can be evaluated. Before, rent was literally worthless. Not only were you not building any sort of equity in the property, it also didn’t build your credit. Which makes sense, because you only build credit when you borrow money. However, I love this new change.
Currently, FICO itself estimates 53 million people don’t have enough credit history to be scored. However, this new system estimates that it can provide credit scores for 37 million people that currently aren’t scored. Of those, the company, VantageScore, estimates that 10.7 million will have a score of 620 or above!
At the end of the day, this change will allow millions and millions of Americans the chance to own their own home, pay down their own mortgage and increase their net worth through appreciation. If you’re looking to buy a home, I’d love to help you out with that. Don’t hesitate to reach out!