You may already know but the FICO 8 credit scoring system has been out for four years already. So then why hasn’t your score benefited from this new system when applying for mortgages?

Truth be told, the mortgage industry is not using the FICO 8 system. They are still using the FICO classic model that was built 8 years ago.

The benefits of FICO 8 would help those folks who may have minor dings, or have had an issue once , or years ago. So what it would do is clump folks with credit damage into groups by problem type and compare you to that type of category to see how risky you are. So if you had a couple minor medical collections years ago, and everything else in line, you would probably benefit from this model. However, if you pay everything on time but keep high balances you may suffer a little because you would be compared to those who pay on time and keep their credit card balances low.

Right now the lagging aspect from implementation comes from the banks, and Freddie Mac and Fannie Mae implementing the FICO 8 system. So far only Citi has implemented it for credit cards (not mortgages). With all the problems Fannie Mae and Freddie Mac have had it is no wonder why they have been slow to make the transition. Given all the hoops, legal, compliance paths that would have to be negotiated, I am sure they are slow to want to implement and spend the money at this time.

Overall, it is thought that few would benefit and so maybe the FICO 8 model being considered a saving grace would be far fetched. If you are curious if you qualify for a home loan to buy or refinance in Denver or Colorado

apply now and we’ll be in touch.

Ray Williams

Branch Manager

Summit Home Mortgage Denver