Changes to the credit scoring system, scheduled for the end of the year, may make it easier for homebuyers to qualify for a lower mortgage interest rate.
Evans, GA -- (SBWIRE) -- 09/22/2014 -- In their weekly blog, Prudential Beazley Real Estate informs their readers of the changes to the FICO credit scoring formula and how it could affect their livelihoods. According to the announcement, an estimated 90% of all credit loan decisions are processed using the FICO system. A person's score can have a dramatic effect, including making it impossible to qualify for a loan.
The old FICO scoring system has made it difficult for many Americans to receive lines of credit. “Unpaid medical bills, recession, and natural disaster have impacted a large number of families,” says Prudential Beazley Real Estate, “Given the critical role that credit scores play in consumers’ lives, it became essential for FICO to alter its scoring system.”
The updated FICO, scheduled to release at the end of 2014, will reduce the importance of overdue medical bills and remove the faults on once late, paid-off accounts. The change is expected to raise the median score for consumers to better reflect recent financial behavior.
The challenger to the new FICO scoring system, VantageScore 3.0, will also bring about change this year.
VantageScore 3.0 is said to ignore paid collections, allow people who use credit infrequently to obtain a VantageScore, and ignore negative scores impacted by natural disasters and economic recession. For many people VantageScore 3.0 and the new FICO system will be a welcome change.
However, Prudential Beazley Real Estate cautions that in order for any new score to benefit a borrower, a lender has to choose to use it when evaluating creditworthiness. Home buyers are encouraged to speak to their consumer lenders for more information.
To read the full article "How Changes to the Credit Scoring System Could Impact You", visit: http://www.prubeazleyrealestate.com/blog/credit-scoring-system-changes/
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