Are you looking to purchase or refinance a property, but want to ensure you snag the best possible home loan terms? Now is the time to act! The Federal Housing Finance Agency (FHFA) just announced the approval of two new credit scoring models, the FICO 10T and the VantageScore 4.0, to be implemented over a multi-year period.
This is great news for potential homeowners, as the new changes aim to fix a lot of current credit scoring errors and will improve the management of credit risk while also responsibly and sustainably expanding access to credit for borrowers with less robust credit histories!
Benefits for Homebuyers*:
- Non-Traditional Trade Lines that are reported will now be calculated into scores! These include payments relating to:
- Phone Bills
- Insurance Payments
- And more!
- Non-medical paid collections will no longer affect scores, leading to an instant boost
- FICO 10T and VantageScore 4.0 both provide more accurate credit scores than Classic FICO
- Overall increase in scores for the majority of borrowers
- Expanded access to credit for borrowers with less robust credit histories
- Now able to see trended data in the calculation of the scores
- Dormant credit will now be counted
*All information is subject to change. Please contact your loan officer for the most up-to-date list of changes.