The New FICO Mortgage Score

The new FICO mortgage credit score may change your ability to get a home loan.

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Recently, Fair Isaac teamed up with Core Logic to introduce a new type of credit score -- a FICO mortgage credit score. This credit score is designed specifically to help mortgage lenders evaluate borrowers who wish to purchase a home.

If you are applying for a home mortgage, your credit score is vital to whether you can get a mortgage and the rates you will be charged for that loan. The new FICO mortgage credit score may change your ability to get a home loan. Read on to learn about the new FICO mortgage score and what is means for consumers.

(To learn about traditional credit scores, see our Credit Reports & Credit Scores area.)

The New FICO Mortgage Score

FICO is well known in the credit reporting industry. Fair Isacc developed the FICO credit score in 1956; it plays an important role in creditors' determination of your credit worthiness (and thus their willingness to extend credit to you). FICO claims that the new mortgage credit score offers a more comprehensive picture of consumers' finances and is more accurate than the traditional FICO score for mortgage backed loans.

The score will take into account the normal factors credit scoring companies use to compute a credit score, including:

  • payment history
  • balance of accounts
  • available credit
  • length of credit, and
  • delinquencies.

All of this information is currently reported on your credit report by credit reporting agencies such as Equifax, Experian, and Transunion and considered in determining your FICO score.

However, with the new mortgage credit score, Fair Isaac also hopes to capture information about the following:

  • child support payments
  • payday loans
  • public records, and
  • rental payments.

Much of this information is pulled from public records. Essentially, the scope of this credit score is far broader than your regular FICO score.

When the New FICO Mortgage Score Might Help Consumers

Many people don’t have a long history of credit cards, auto loans, or bank loans. These people could now see an improvement in their mortgage credit scores based on their on-time payments for child support, rent, and payday loans. This would allow many people to improve their credit score to the threshold necessary for a home loan and expand lending to people who currently have little or no credit history.

However, so far, it is unclear how much weight these on-time payments will have in helping a person qualify for a mortgage under the new score.

When the New FICO Mortgage Score Might Hurt Consumers

With the new score, being evicted or missing a payday loan can now hurt your chances of buying a home. This definitely shifts some power from consumers to lenders and landlords. Here's how:

  • Payday lenders often charge high fees and use controversial tactics to collect; this new credit score could allow those lenders to exert additional pressure on their borrowers.
  • Landlords could potentially report a missed payment and cause black marks on a tenant’s credit report even when the rent is lawfully withheld by the tenant. While inaccurate information could be disputed and investigated, it is often difficult for consumers to remove inaccurate information from their credit reports. (To learn how to correct errors, see Cleaning Up Your Credit Report.)

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