Mortgage Lenders are Tightening their Belts
Do you have a credit score lower than 680? If your answer is yes and you are in the market for a mortgage, expect to make at least a 20% downpayment before you can qualify for the best interest rates.
The recent subprime mortgage crisis has resulted in a stricter number of guidelines from major lenders [...]
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FICO 08
A new credit scoring system is coming soon which promises to be more forgiving to people who may miss an occasional payment.
Fair Isaac Corporation, creators of the FICO score will launch the new credit system which will be known as FICO 08. FICO 08 is supposed to be a better predictor of consumer defaults, a criticism of the current FICO model which failed to help prevent the sub-prime mortgage fiasco.
FICO’s credit scoring algorithm is not widely known, but what is known is:
- Credit scores will still range from 300 to 850
- Your credit history will be factored
- An occasional missed payment will not affect you as much under the current FICO system
- The amount of debt you have will be factored
- Open lines of credit will be factored
- Piggybacking (using another person’s good credit to boost your own) will no longer be allowed.
So how is FICO 08 going to affect your credit score?
You will most likely experience an increase in your credit score if you have different types of credit accounts in good standing, for example mortgages, credit cards and auto loans.
If you have many delinquent accounts, your credit score will take a hit – probably greater than before under FICO 08
Use of FICO 08 is expected to begin sometime this spring, although some lending institutions might take a wait and see approach.
Either way, don’t wait until it’s too late. Start cleaning up your credit now.
The Ultimate Credit eBook can help you Raise Credit Score. Visit the site at http://www.ultimatecreditebook.com.
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