Technology isn’t the only industry that regularly updates its systems; FICO (Fair Isaac Corp) does as well. This summer, FICO expects to roll out its newest versions of credit scoring, FICO Score 10 and FT.
The newest FICO scores don’t necessarily mean borrowers will have a more difficult time getting a loan, but the new scoring system create a larger gap between those with good credit and those with fair to poor credit.
FICO Score 10 will likely reward those who have good credit with a higher score. Those who have more difficulty paying off lenders and who currently have lower credit scores will likely see even lower credit scores.
Borrowers, Do Not Fret, There are Reasons to Remain Calm Despite the Release of FICO Score 10 and FT
Borrowers who are shopping for a loan in the near future have at least two advantages. First, there are numerous FICO releases. According to Ted Rossman, industry analyst at CreditCards.com and Bankrate, lenders tend to use a more forgiving version, FICO 8, released in 2009.
With underwriters preferring this version, it is unlikely that any lender is going to jump at the chance of using a new system, which may, or may not work to their advantage. Without testing how the new FICO version will impact the number of approved loans, institutions will most likely wait awhile before adjusting to the new system.
Ways to Achieve a High FICO Score
No matter what FICO version is being used, three principles remain consistent to earn a high FICO score.
- Pay bills on time every month
- Avoid applying for too much credit too often
- Keep balances low
It’s also a smart idea to check your credit report often. All too often, errors can occur that you may not be aware. The result is a lower credit score and higher finance rates when you do get a loan.
Sign Up for Experian Boost
Experian Boost was launched in 2019 in an effort to build credit history and improve credit scores. Consumers connect their bank records to provide a history of utility payments, telephone bills, and rent.
This free service has helped almost a million people improve their credit scores, according to Experian’s blog, Does Experian Boost Work? Borrowers whose lender uses a more recent FICO score see the most improvement.
Let The Gamache Team Help You Find a Lender
The Gamache Team can help you find a lender that works with you and your situation. We have come across almost every situation that might require a more detailed and creative approach to lending. Our relationships with our lenders provide a valuable asset to help our buyers get into the home of their dreams or prepare them to buy that dream home.
Contact us to learn more about how the lending process works and what you need to prepare to get a home loan.
