Credit Score Impact on Consumers
One of the most significant pieces of information required for taking advantage of the great home values in Tampa, FL is your FICO score. Consumers are more familiar with phrases like “credit rating” and “credit score”, but they all mean the same thing: the resulting number that determines your credit risk, whether it is a new truck, credit card or home for which you are applying.
Fair Isaac Corporation, or FICO, waited until the 1980s to start building credit scores, about thirty years after the business started. The credit scores, the industry standard for years, are used by most lenders to determine loan approval. The numerical result is achieved by looking at a consumer’s credit file information, weighting each relevant item with a number, and determining the potential credit risk, or FICO score.
The higher a person’s score, the better the indication that the debt will be paid as agreed. Lower credit risk during a period of economic recovery makes it easier to qualify for a mortgage and get ideal terms, such as a lower down payment, higher pre-approved amount and excellent interest rates. Although the scores range from 300 to 850, the common numbers for the US are between 500 and 799. The optimum number of 750 takes conscientious effort to reach. Those trying to get a good deal for a mortgage have been seeking a more equitable method of evaluation.
A New Mortgage Credit Score
Recently FICO and CoreLogic responded to the request to reconsider how the mortgage credit score is determined. Rather than the traditional method of using the same scores that determine loans for vehicles and credit card approval, more information will be considered when a person applies for a mortgage. Potential homeowners that have put their dream of living just an hour away from Walt Disney World in a beautiful house in New Tampa on hold can now reconsider that option. Lines of credit, home equity loans and first and second mortgages will be reviewed with the newer standards.
It is a winning situation for lenders that are in the process of rebuilding their mortgage origination volumes. It will have a positive influence for the real estate market and those wishing to purchase a home before prices escalate. Reestablishing confidence in lending and consumer faith in the way credit worthiness is evaluated is an important step in economic recovery.