Good news for credit scores
We have some great news for people wanting to buy homes but had some items such as medical collections affecting their credit score.
The Fair Isaac Corporation, which provides the FICO scoring model utilized by credit bureaus, recently announced a new scoring model which will be known as FICO 9. This new credit score is scheduled to be released in the fall of 2014 or the beginning of 2015.
The release of the new scoring model, means that there are three important changes to the way credit reports will be scored:
- Medical collections will not be treated as harshly as other types of collection accounts, thus having a lower negative impact on credit scores.
- Paid and settled collection accounts will no longer negatively affect credit scores. In the past, paying off a collection account would cause a severe drop in credit scores.
- Residential rental trade lines will now be included in credit scores.
These as very positive changes, that we hope will eventually impact the mortgage process. The mortgage industry has been very slow to adopt new scoring models until their performance has been tested to ensure the new scoring model will be a sound indicator of a borrower’s ability to repay a debt.
In the past, FNMA (Fannie Mae) and FHLMC (Freddie Mac) have run studies to determine if the new scores are better indicators than the scoring models that are presently being used. Once they have applied the new scoring models to existing loans and can see how these loans perform, we may see a change in how credit is evaluated.
Unfortunately, the mortgage industry could be several years away from seeing these new scoring models implemented if things proceed as usual. These changes were due in part, by pressure brought by the mortgage industry lobbying the CFPB for changes, so we are hopeful that CFPB’s involvement will pressure FNMA, FHLMC, FHA and VA into adopting these changes quickly.
Want to buy now and don’t have great credit? Well, we work with one of the top law firms in Dallas that has an entire division dedicated to Credit Repair. The best part is that they don’t charge upfront fees like many other companies (because its actually illegal – bet you didn’t know that). The company that we trust for our clients is Prevost and Shaff (www.prevostandshaff.com).
Want to buy now and have decent credit? Our preferred lender is also the most honest and hardest working group of people in the industry. Oak Mortgage – Tuttle Group (www.facebook.com/TheTuttleGroup) is our go-to team of mortgage experts. They will even give you a free consultation to see how much buying power you have. If you mention that you were referred by Ohlig Group Realty, you can get a free appraisal (value of about $400).
Already pre-approved? Great, you can search homes here or just call me 972-800-7844 and I can sit with you and help you through the home buying process. Our service is 100% free to you, the buyer. We will even have all of your utilities transferred or set up for free via Utility Connect (www.og.utilityconnect.net). We are a One-Stop-Shop for all of your Real Estate needs.
Your Friend in Real Estate
If you want more details and want to be on my mailing list for new info, email me at chris@OHLIGgroup.com
To find homes for sale or lease, visit my site at www.OHLIGgroup.com or contact me 972-800-7844
–Christopher Ohlig, Broker/Owner
For more info on new developments in the area, check my other links below:
- Frisco North in Frisco, TX
- The Colony’s new Ampitheater Park
Christopher Ohlig 