On July 10th, 2012, FICO® and CoreLogic® introduced a new consumer credit scoring model aimed at increasing the number of people who qualify for mortgage loans. According to Becky House, Education Director for American Financial Solutions, a non-profit credit counseling agency, “This new model has the potential to help many well deserved people enter into home ownership.”
Called the FICO® Mortgage Score Powered by CoreLogic®, this model combines the credit information in an individual’s typical credit bureau file and information from CoreLogic’®s outside data sources which include items such as property records, rental histories, payday loan and rent-to-own companies and court records among many others. In the past, these positive payment records were not included in a traditional credit report or credit score. Now they will be.
The score is designed to improve a lender’s ability to predict loan repayment and potentially increase the number of mortgage loans lenders are able to make. This is possible because lenders have a more complete picture of a consumer’s credit history and risk status. According to a press release by FICO®, this model is expected to increase the number of individuals qualifying for a mortgage. However, consumers should be aware that, even if they qualify for a mortgage, the inclusion of records such as payday loan usage, rent-to-own payments, and certain court records may lead to higher mortgage rates.
“Some of these sources of credit are historically used by people with low incomes or with credit issues,” said House. “By using this data in determining loan approval, you increase the risk that people will be charged higher fees or even be disqualified from getting a loan.” House cautions that consumers need to comparison shop when looking for a home loan and that they need to know what information is in their report before they apply.
Not all mortgage lenders will be using this new credit report and score.
Consumers are entitled to see a copy of their CoreLogic® report, called the CoreScore®, for free. To obtain a copy:
Call CoreLogic Credco, LLC at (877) 532-8778
Or write to:
CoreLogic Credco, LLC
P.O. Box 509124
San Diego, CA 92150
When writing include:
· Your first, middle and last name,
· Social Security number,
· Current and previous addresses, and
· Date of birth.
To learn more about the information contained in consumer credit reports and for tips on improving credit visit www.americanfinancialsolutions.org and click on Get Started Now.
American Financial Solutions (AFS) is a non-profit 501(c)3 financial education and credit counseling agency that helps people find solutions for managing their money and improving their financial lives. Since 1999, AFS has helped individuals across the United States through one-on-one counseling, classes and the use of debt management plans. AFS is a member of the National Foundation for Credit Counseling (NFCC) as well as the Association for Independent Consumer Credit Counseling Agencies (AICCCA). AFS is also accredited by the Council on Accreditation (COA) and has an A+ rating by the Better Business Bureau. Find us and add us on Facebook, Twitter and Google+.