Mortgage FAQ: Are FICO Credit Scores Going Away?
"I RECENTLY READ THAT FICO CREDIT SCORES MAY NO LONGER BE USED IN THE FUTURE. INSTEAD, LENDERS WILL BE USING ALTERNATE SCORING MODELS. IS THIS TRUE?"
Although any movement away from the current FICO credit scoring model isn’t a done deal, there has been some serious discussion—both inside the federal government and in Congress—about alternate scoring models. Not only are federal regulators putting pressure on mortgage giants Fannie Mae and Freddie Mac to come up with alternatives to FICO, but current Congressional legislation—called the Credit Score Competition Act—may also force Fannie and Freddie to adopt new scoring models in the future. The goal of having new scoring models is to “expand access to mortgage money for large numbers of creditworthy loan applicants,” according to the sponsors of the legislation. As for the specific details of such models, that’s still to be determined. However, even if Fannie and Freddie do introduce new alternative scoring methods at some point, keep in mind that different loan providers use different versions of the FICO credit scoring model—and place varying weight on different aspects of scoring—so how such a change would affect you as a borrower would depend on your specific loan provider’s underwriting policies.
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