NEW FICO SCORE SUITE TO LAUNCH THIS SUMMER

Dated: 03/24/2014

Views: 1469

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.

http://blog.leads-direct.org/2014/03/new-fico-score-suite-to-launch-this-summer/

Blog author image

Jim Cavoto Managing Broker

Jim Cavoto has been serving Colorado Real Estate market since 2000. Jim carries both Real Estate Employing broker level license & The Colorado Mortgage Origination License. As a rare "Native" of Col....

Latest Blog Posts

HOW BIG OF A HOME DO YOU NEED

When buying a new house, it’s easy to get distracted by size and think that bigger is always better. However, depending on your situation, the complete opposite may be true.So how can

Read More

Playoff Hockey Return To Denver

The Stanley Cup Playoffs are returning to Denver. Monday and Wednesday night lower downtown will be filled with 18,000 hockey fans. Denver is and has always been a rich sports town. The Avs, who

Read More

Bring Natural Light Into Your Home And Watch It Sell

6 tips for letting natural light sell buyers on your listingThere are tons of benefits to bringing some natural light into a home.As real estate agents, we know that not much resonates better than

Read More

Great Summer Hikes In Colorado

SPORTS OUTDOORS 10 day hikes near Denver to take this summer You don’t have to travel far or overexert yourself to experience Colorado’s beauty

Read More