FICO Score Boost
: Things Everyone Should Know
The Federal Housing Finance Agency will require mortgage lenders to consider VantageScore credit ratings when assessing prospective applicants.
As a result, millions of Americans may profit from the shift in lender credit scoring algorithms, as lenders will adopt a new version of the FICO score for the first time in over two decades.
Furthermore, more black and minority families are expected to have their mortgage applications approved than before.
This is because, in addition to conventional credit, the VantageScore and new FICO score now incorporate rent, utility, and phone payment information.
"When both credit scores are available, using both will result in more borrowers that can be reviewed by the Enterprises than requiring just one score...
"This will strengthen their credit risk management while boosting access to loans for consumers with poor credit."said FHFA Director Sandra Thompson
It is estimated that up to 53 million Americans do not have enough credit history for the FICO model to consider them.
Who will benefit?
are particularly hard hit, since they are more likely than any other group to lack a FICO score or have one that is less than 620
The new VantageScore assessments will enable an extra 37 million consumers to receive credit scores.
With the new conditions, the corperation expects 10.7 million borrowers, including 4 million minorities, to have a score of 620 or better.