New Credit Scoring Rules to Make Qualifying for Loans Tougher in 2011
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Author: By Lynnette Khalfani-Cox, The Money Coach
If you thought it was hard to qualify for loans and obtain credit in 2010, wait until 2011, when lenders start using freshly updated, more rigorous versions of two popular credit-scoring systems.
Fair Isaac, creator of the widely-used FICO score, recently rolled out an enhanced version of one of its key credit scores, the FICO 8 Mortgage Score. This new score may make it tougher for many consumers to secure home loans.
Meanwhile, another credit score growing in popularity, the VantageScore, is also undergoing significant modification and will be available to lenders starting in January 2011.
Both credit-scoring systems have been revamped to better account for consumer behavior in the wake of the housing crisis and the Great Recession. Specifically, the two scoring systems have fine-tuned their predictive powers, and now aim to help lenders determine who is likely to engage in a strategic default on a mortgage.
A strategic default occurs when a homeowner who appears to have the ability to pay for their home nevertheless decides to stop making mortgage payments, yet continues to keep up with other financial obligations, such as credit card bills or auto loans.
Read the rest Lynnette’s article on WalletPop
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Posted in Credit Scores | 
Tags: Credit and Debt, Credit Scores, CreditScore, Equifax, FICO, FICO score, Mortgage loan, TransUnion, VantageScore
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