fico scores

More Columbia SC homebuyers should be able to qualify for a mortgage without the increasing risk to lenders that caused the big credit crunch. All of this should come about through more sophisticated credit risk scoring that uses alternative data, such as unsecured credit and property history in consumer credit report analysis.

Traditional credit data and analytics continue to be relevant, but are not sufficient to satisfy the consumer credit reformation of today. As a result of the changes in consumer behavior, lenders cannot revert back to their prior mortgage underwriting policies. Too much damage has already been done to the market, consumers, shareholders and investors.

Consumers used to pay mortgage debts first, but because of the recent financial crisis some consumers now treat paying other debts, such as credit card bills and car payments, as a higher priority to maintain personal financial liquidity.

Why More Columbia SC Homebuyers May Qualify

Fico ScoresAccording to a new report by the CEB TowerGroup, data from a joint analysis conducted by CoreLogic and FICO that compares the FICO® Score used by most lenders today with a new score launched in July was evaluated. The traditional credit data from national credit data repositories and the unique alternative credit data contained in the recently launched CoreScoreTM credit report shows the analysis of 300,000 mortgage applications found that 3,100 more applicants would receive a qualifying credit score of 700 and approximately 70 percent of a sample population saw their credit score improve.

The new FICO/Corelogic score is more accurate than the prior FICO® Score in identifying the riskiest loans improving lenders ability to discern consumer credit risk at origination. For applicants identified as the riskiest 10 percent of the lending population (those most likely to become past due on their mortgage loan), it identified 10 percent more seriously delinquent mortgage loans – loans 90 days or more past due.

This new credit risk scoring should help more Columbia SC homebuyers qualify for a mortgage than with the old scoring system. Alternative credit information can support Columbia SC homebuyers with newly established credit files with good credit, those with minimal information in their traditional credit files but with good alternative credit payment histories, and long-time renters with no serious payment issues.

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Columbia SC homebuyers need to know the rules of credit reporting in this marketplace where lenders are demanding record-high FICO scores.

Given the importance of maintaining high scores, we thought it would be helpful to go over the key rule concerning inquiries that affect Columbia SC homebuyers, since Fannie Mae and Freddie Mac are now averaging around 760 scores on approved mortgages this year.

FICO Inquiry Rules Affecting Columbia SC Homebuyers

homebuyers need to know the FICO rulesRacking up large numbers of inquiries can lower your score. The FICO models consider such numbers significant because extensive behavioral research has shown that “consumers who are seeking new credit accounts are riskier,” more prone to defaults. Statistically, people with six or more inquiries on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports, so inquiries do matter.

This doesn’t mean if you’re shopping for a mortgage or looking to refinance that your score will drop if you have 6 lenders pull your credit reports. The FICO models ignore all mortgage-related inquiries during the 30 days immediately preceding the computation of the score. All mortgage inquiries during the 45 days preceding your loan application count as no more than a single inquiry. The same goes for shopping for auto loans and student loans, but no other forms of credit fall under this buffer zone.

Fannie Mae and Freddie Mac have begun requiring lenders to pull a second set of credit reports immediately before closing to ensure that applicants’ FICO scores haven’t changed significantly. Depending on when the first reports were pulled, you could be hit with two inquiries for the same loan. That could cost you 5 to 10 points on your score.

Columbia SC homebuyers need to keep in mind, if you’re shopping for a mortgage, avoid all other credit-related shopping until your mortgage is approved and closed. Avoid shopping for furniture, home improvements, credit cards, you name it, in the weeks before your home closing. A string of inquiries can mount up and knock your home purchase right out of the water.

If you’re checking your own credit, either through AnnualCreditReport.com (where they are free once a year) or by buying them from Equifax, Experian or TransUnion, your FICO score goes untouched.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

home buyers need higher FICO scores - man hiding faceColumbia SC home buyers are needing higher and higher FICO scores these days in order to qualify for a mortgage. Very few Columbia SC home buyers sporting credit scores below 620 are able to obtain loans. On the bright side, more are putting down less than 20 percent.

According to the February Realtor Confidence survey conducted by the National Association of Realtors (NAR), the percentage of home buyers putting less than the standard 20 percent down payment amount is at the lowest level in nearly a year. The same survey found that prospective Columbia SC home buyers had difficulty qualifying for a mortgage.

Columbia SC Home Buyers With Good Credit

A comparison of FICO scores for transactions as reported by Realtors responding to the survey were compared with FICO scores reported by Fannie Mae’s “Acquisition Profile.  By Key Product Features”, credit availability to lower scoring applicants seems to have declined since the Fannie Mae data in 2001-2004.

For those Columbia SC home buyers with good credit and access to programs like FHA, down payment requirements are lessening. Approximately 64 percent of buyers with a mortgage are putting down less than 11 percent, according to the survey.

Very few Realtors responding to the survey said prospective home buyers with FICO scores below 620 were able to obtain a mortgage. The same group said approximately 15 percent of those with FICO scores between 660 and 700 were able to get a mortgage. These figures were compared to 18 percent in the Fannie Mae data.

What Columbia SC Home Buyers Should Do First

It pays for Columbia SC home buyers to find out what their FICO score is before they even begin to look for a home. If there are items in your credit score that can be corrected upward, that takes time. It’s better to get the scores up before you apply for a mortgage, rather than find the home of your dreams and then find out your score is too low to qualify.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.