The credit scoring system is already baffling enough, and a new bill was just introduced that may change the whole process. Bill H.R. 4211, also called the Credit Score Competition Act, is a bill that would create a new credit-scoring system. Here’s what you need to know about how this new bill may affect your search to buy a house for sale in Irvine.
Currently, most lending companies rely on the FICO credit score to determine whether or not a buyer is a suitable candidate for a mortgage. The new bill would compel mortgage institutions backed by the government, such as loan giants Freddie Mac and Fannie Mae, to use different credit score models. This could result in giving a second chance to buyers who would otherwise be denied due to their FICO score. The new bill also would make credit scores public, so the process of applying for a loan would be simpler and more open to the average buyer.
Traditionally, a good or excellent FICO score requires a lengthy history of good credit, regular income, and large bank accounts. However, many trustworthy people are denied credit due to this outdated method of looking at credit. Potential first-time buyers may not meet FICO standards, but the new credit scoring system would use factors such as timely rent payments and other more modern ways of measuring responsibility to determine a person’s credit worthiness.
Though it may still be a while before this bill becomes a law, H.R. 4211 has bipartisan support, so it seems likely to pass. The updated credit scoring method would be much more favorable to first-time buyers, especially those with a low FICO score. Currently, the Credit Score Competition Act needs to pass through the United States House of Representatives before continuing on its journey to become a law.
Interested in learning more? Perhaps you’ve decide to take the leap and buy a home for sale in Irvine, CA. Either way, we are here to answer your questions, show you homes that fit your wants and needs, and help you through the home-buying process!