Is the new mortgage credit scoring system from FICO just what investors have been waiting for to fuel a new real estate rebound?
For a long time real estate investing pros have debated that a new credit scoring system is needed following the housing bust or perhaps even wiping everyone’s slate clean. So is the new FICO score the answer we have been waiting for to enable many more home buyers to get mortgage and finance a new housing boom?
CoreLogic recently announced the launch of its new CoreScore product, a new FICO score just for mortgages. Designed to help those with thinner credit and who aren’t getting credit for all of the things they do pay on time. CoreLogic executives have been bragging that this new scoring system has been able to bump up 45% of consumers credit scores to a level which would qualify them for home loans under current standards and pushed up 24% of borrower’s scores by 50 points or more during studies.
What’s new about this new way to model credit scores is that it takes into account a far broader range of data and accounts which normally aren’t reported on traditional credit reports. This provides more credit depth and strength for those who have other forms of credit. On the downside this could back fire for many who haven’t paid these items on time because they didn’t think it would affect them.
The new CoreScore isn’t replacing the old system yet but it could or could be used in conjunction with current credit reports. This could fuel more profitable real estate investing if more potential buyers can qualify for home loans but this will only work if investors educate themselves on how to score well under the new model and pass that knowledge on to buyers and renters.