Sep 272014

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By G. Steven Bray

FICO, the company that owns the most widely used credit score, recently announced some changes to its scoring model to more accurately predict credit worthiness. This is good news because from a lender’s perspective, I want a credit score to represent the most accurate estimate of a borrower’s credit health. It appears the changes really could help folks who use credit sparingly or who have medical collections.

Unfortunately, mortgage lenders can’t use the new model until Fannie Mae and Freddie Mac adopt it. Fannie and Freddie acknowledged last week that they will study the new FICO model as well as the Vantage Score model, which some claim also would allow more folks to qualify for credit. Unfortunately, Fannie says this study will take some time to complete as it claims switching to a new model requires extensive testing and comes with substantial costs. So, despite the promise of study, I wouldn’t look a change any time soon.

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