FICO Improves Credit Scoring Model
FICO score which was created by Fair Isaac Corporation is a way of measuring a person’s creditworthiness. The score range is between 350 and 850 and a good FICO score is about 700. Fair Isaac has just announced that it will be changing its credit scoring model so you will not be penalized for paid non-medical collections and unpaid medical collections. This change will help more first time home buyers qualify for a mortgage loan but it may take lenders some time to adopt this change.
Today it is more difficult to get a home loan with higher credit score requirements and tighter underwriting guidelines and these changes may open the door to increased homeownership for first time home buyers. I encourage potential home buyers, even those with bad credit, to run their credit report with 3 scores and get some professional advice on how they may improve their credit scores to increase their chances of getting an approval on the best first time home buyer program.
There is no such thing as starting the home buying process too early and you don’t want to get caught in a situation which a credit issue could cost you the chance of owning a home. For example, I had one buyer who had a 750 credit score and we couldn’t proceed any further until a dispute on an account was resolved one way or the other and it delayed the closing.
You shouldn’t have a false sense of security about your credit scores and history and wait until the last minute to get pre-approved because it could come back to haunt you. You need to get the ball rolling on a mortgage application even if you are not buying for a year or two just to make sure you are on the right track. You can contact us today at 847-516-5743 or fill out the short application and one of our experienced team members will assist you in getting pre-approved or providing steps on what you need to do to purchase your first home.