New credit scoring model for mortgages could help more people buy homes

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New credit scoring model for mortgages could help more people.jpeg

Companies that buy most of the country’s household loans will now accept a second credit registration form for mortgages – a change that can help the actress borrowers an incomplete representation to qualify for financing.

Fanny and Faridy Mac, the two companies supported by the government, which supports about 70 % of the American mortgage market, wrote lenders using Vantagescore 4.0, a FICO credit alternative to FICO, Bill Boute, director of the Federal Housing Finance Agency, in a publication on Tuesday.

This step is designed to finish Fico near the credit scoring in real estate subscription, low closure costs, and to expand credit for borrowers who are not picked up with a well -captured payment by Fico.

Credit scores are a major factor in determining whether the potential home owner is eligible to obtain a mortgage, and the interest rate they will pay. It usually takes a credit degree of at least 620 to qualify for the most common type of loan, known as the traditional mortgage. It takes much higher, often 750 or higher, to receive the lowest interest rates.

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Learn more: Traditional loan – what it is and how to get one

For years, Fico was actually the only company to provide credit grades. To determine creditworthiness, it is considered factors that include the payment record, the amounts due, and the period spent by the borrower. Without the result and the date of the previous borrowing, it may be difficult to reach credit, but it also requires credit to build a credit record, a classic puzzle of chicken and decoration.

Vantagescore was created by the three major credit offices, Experian, Equifax, and Transunion, in 2006 as an alternative to Fico. Its grades use the same scale from 300 to 850 as Fico, its latest model, Vantagescore 4.0, designed to consider consumers with limited credit history, partially by allowing rental payments and facilities in the credit file.

Learn more: Vantagescore opposite Fico: What is the difference?

“My request today (thanks to my managers, Potus) will allow Americans to use their rent to qualify for a real estate mortgage. The date of credit will not only include credit cards and loans. This is huge,” Pulte was published.

This step should help more members of the traditional representatives, such as black, Latin borrowers and migrants, to build credit and eventually qualify for loans, said Rick Rock, NFM LENDING Vice president, such as black, Latin borrowers, and migrants, to build credit and eventually qualify for loans.

“Maybe there are 30 million people or more who are considered under banks,” Rock said. “They fell to the leasing, so there is a full aspect of stocks, wealth and real estate that have not been built.”

However, the changes do not mean that all borrowers have been closed before will qualify for the traditional real estate mortgages overnight. FANNIE and Freddie have strict implicit standards, and borrowers will need to find a lender using Vantagescore, and they record enough high, and they have the income and assets needed to approve it.

Vantagescore estimates that 5 million Americans benefit from changes.

Morgan Hardy, a mortgage loan official at the Mortgage Corporation in Noxfil, said Tin.

“If they withdraw 15 to 30 points, some of the people who were previously would have changed a loan from the Federal Housing Administration loans,” Hardy said. “Now it makes sense for them to do traditional.”

Hardy said he is a “very great supporter” of the federal housing management loans, which are supported by the government and requires less credit degrees and low payments to qualify compared to traditional offers. But he admits that some home sellers are hesitating to work with borrowers from the Federal Housing Administration loans because loans can come close to a longer period and come with strict assessment requirements.

Read more: The best lenders in federal housing management

There is also hope that the new result competition will help reduce the costs of credit reports for borrowers and lenders, which have surpassed inflation in recent years.

Rock said that the most common type of credit report used in real estate subscription may cost more than $ 140, up from $ 30 to $ 40 a few years ago. Harden saw them up to $ 300. In the end, most buyers end up developing these costs when closed.

The Mortgage Banking Association, a commercial group, said it is “very frustrated” due to the high prices, and the financial consumer protection office during the era of former President Biden indicated the costs of increasing reports as part of the investigation of “unwanted fees” in the closure.

Meanwhile, Boltti said that the Federal Housing Agency will encourage lenders to adopt the new registration model.

“We will stimulate lenders, who use Vantage 4.0 and Fico, with better pricing – anything to help the consumer,” was published on X.

Claire Boston is the first correspondence of Yahoo financing that covers housing, mortgages and home insurance.

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2025-07-09 12:54:00

0 4 minutes read