Oh, my! There's a new model coming to town! A new CREDIT SCORING MODEL that is!
We've been watching for FICO 08 for almost a year now, but now expecting it to roll out the first quarter of next year - that would be 2009!
What's it going to do? Remove "authorized user" credit history from an individual's credit profile. There's good news and bad news associated with FICO 08.
The good news: it will stop individuals from "renting" their good credit. That's right! There are actually people out there that RENT their credit to individuals with either no credit or bad credit in an attempt to raise poor or no credit scores to an acceptable level. Does that sound wrong to you? Me, too! And FICO 08 will put an end to that credit scam.
The bad news: spouses, college students, who have been added to accounts to help them establish a credit history won't be able to do that by being added to a credit card of their spouse or parents. So the "here today and gone tomorrow" expression should make my point. That's right! That credit history will just vanish. So get ready because we can only imagine what this might do to buyers caught in the middle of this scoring transition!
And with credit scores now being so closely tied to FICO scores, guess what that is going to do???
For more thoughts on this subject, go to: http://www.inman.com/buyers-sellers/columnists/dianhymer/will-shopping-multiple-lenders-hurt-credit#comment-8335
Views and opinions expressed on this site are not necessarily those of WR Starkey Mortgage.
Ruth Vogt, Branch Manager
Colorado LMB #LMB100023827
Ruth what does this mean to RE Agents? Are our buyers more creditable?
hmmm... interesting question. It means that a buyer's credit score will be strictly limited to obligations and pay history they are personaly liable for. This socring system will prevent "piggy backing" credit. To get more information on what credit "piggy-backing" is, click here:
http://www.mortgagenewsdaily.com/6142007_Credit_Piggybacking.asp
So, yes, the credit profile will be a more creditable reflection of their ability to pay.
So I should have a more warm and fuzzy feeling knowing my clients are REALLY qualified to buy a new home?
Unless they have minimum FICO scores and have "borrowed" credit. No way to really know that - not even for us in the lending business - until we pull their credit.
Sorry I can't be more direct. It will just depend on the situation of the borrower.
Ruth, this is great information. Your blogs are always so informative. Thank you lady!
Brooke