FICO is releasing a new version of their FICO score this summer, called the FICO Score Nine. This new product is expected to address the concerns that lenders have regarding score variations that occur across the three credit bureaus.According to FICO, 90 percent of US lenders use the FICO Score when making credit decisions for consumers. Over 10 billion FICO scores were purchased by lenders in 2013. This makes the FICO Score extremely important to both lenders and consumers.FICO Scores and the three credit bureaus (Equifax, Experian and Trans Union) are different agencies. They have an integrated relationship as the FICO score is built from the information provided by the credit bureaus.FICO Scores and LendersLenders rely on the accuracy of the FICO algorithms to provide appropriate information to make lending decisions that meet federal regulatory compliance requirements.
The FICO score is used for mortgage lending, car financing, credit card decisions and personal loans.The new changes to the scoring is meant to account for changes that have occurred in the industry over the last 5 years. One of the biggest changes to the new score will include industry specific FICO scores for mortgages, auto loans and credit cards. It is not clear how the scores will differ in their calculations, but the goal is to provide a better analysis of consumer credit. With these additional tools lenders will have the ability to make confident decisions based on the data they receive from FICO scores.
FICO Scores and Borrowers FICO scores have a significant impact on borrowers because of their wide industry use in making lending decisions. FICO scores and credit bureau reports are used for lending decisions, insurance pricing, rental approvals, job hiring and more. This makes the FICO score a very important number to consumers.The changes in the scores will impact customers in two major ways. First the new FICO Scoring claims it will reduce discrepancies across credit bureaus. Currently credit bureau scores can vary widely. The challenge is that these variances are often due to reporting. Many companies only report to one bureau. It is not clear how this will impact the consumer, with higher or lower scores.The second change is that lenders will be able to get industry specific scores for mortgages, credit cards and car loans. It is not clear how the new scoring will be established, but the goal is to provide lenders with more accurate decision making numbers, enabling them to offer more loans. If this is the end result, it could provide more financing opportunities for borrowers, in a time when lending is very tight.It is important for consumers to check their credit reports from all three bureaus at least once a year. This can be accomplished for free at www.annualcreditreport.com. This government website provides the information that lenders view.Remember that the FICO Score is less about debt and more about creating a record of how a consumer pays their bills.
Author:Jim Cavoto Managing Broker Phone: 720-309-3014 Dated: March 24th 2014 Views: 1,363 About Jim: Jim Cavoto has been serving Colorado Real Estate market since 2000. Jim carries both Real Estate Em...
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"When I decided to sell my home and look for a new place, my first call was to Jim and Ion Real Estate. He listed my condo and in two short weeks my place was under contract. Now, the real fun began, looking for a new place! The Ion Real Estate website was great. I loved the map function and the emails it sent with new listings that matched my previous searches. On Saturday, Jim and I headed out to look at several places I had picked to see. At the time I didn’t really notice how he listened carefully to everything I said about each place from the lighting to the layout. I was even a little sad that I didn’t find anything that day but Jim reassured me not to worry and a week later he had set up some more appointments. I still remember walking into my new place and just knowing. I had only taken two steps into it and I knew I wanted it.
Next came the easy part for me, but this is where having the right realtor and mortgage broker is essential. They make it seem easy! Jim guided me through all the aspects of my sale and purchase. I appreciated how simple each step seemed from making an offer to dealing with inspections. Even the loan seemed easy. I asked a ton of questions, I think it’s the teacher in me. I wanted to understand all the moving parts. Jim explained everything so clearly that I joked that he missed his calling and should have been a teacher, but he didn’t, I’m glad he is helping people find their homes!
Recently one of my close friends mentioned she wanted to stop renting and buy. I immediately referred her to Ion Real Estate. This time I was able to watch with an outsider perspective at the way Jim cued in on my friend’s preferences. Stephanie kept talking about the charm of old houses, a far cry from the sleek modern condo I chose. By the second house-hunting excursion, Jim knew just which home she would pick. As we walked up to the front porch, I saw Stephanie with the same excitement I had felt just a few months earlier. I watched her mentally move in her furniture and this time I saw the smile that crossed over Jim’s face when he knew Stephanie had found her home.
Throughout both experiences, it was clear Jim understands what people want in their homes and how to structure the entire buying experience to be a positive one. I have heard so many crazy stories from people that didn’t chose the right realtor or mortgage broker. They always start by saying, “I didn’t think a realtor made any difference.” It makes a difference! It made a difference for me and for Stephanie. Owning is better than renting; and, it is even better when Jim and Ion Real Estate are guiding you through the process!