Perhaps the biggest hurdle in obtaining a mortgage is having a sufficiently high credit score. The scoring system being used to determine eligibility has been in place for years, but 2016 may signal the beginning of major changes that could open the window for a greater number of buyers looking to experience the benefits of homeownership.
Congress and federal regulators are putting pressure on major mortgage lenders to change things up and modernize their credit scoring models to include additional factors like rent, cell phone payments, and other non-banking forms of credit as a supplement to a borrower’s credit file. As some borrowers may have very little credit history, making such changes could yield significant improvements.
Last month, the federal agency that keeps tabs on major mortgage companies like Fannie Mae and Freddie Mac ordered the companies to finalize their plans in adopting updated or alternative credit scores in 2016 and putting these plans into action. Coincidentally, around the same time, there was new legislation introduced called the Credit Score Competition Act which is designed to broaden access to mortgage money for loan applicants that are creditworthy, particularly first-time buyers and minorities. Because of credit scoring systems, these two groups are frequently denied loans because of current credit scoring practices.
This update is brought to you by The Rick and Tracy Ellis Team. We specialize in luxury properties within the St. Charles Mo real estate market and have over forty years of experience in other markets like St. Louis County real estate. Call 636-299-3702 to get started with buying, selling, and investing with our experienced team of Realtors. Also, be sure to tune into 97.1 FM NewsTalk every Sunday from 10 am to 11 am to listen to the Tracy Ellis Show.