As a new California resident and Realtor in the Ocean Beach / Point Loma community I know it is a struggle for most hardworking people to achieve their dream of home ownership. While the economy may be looking like it's on the rise there are still everyday struggles that we all have to face. The high cost of living and low wadges makes it very hard to make ends meet and many American's find themselves still swimming in debt. If you have had a struggle in the past with your health and you now have a large debt on your credit due to medical bills the new FICO Score formula may be just what you needed. It could be the difference of renting to securing a home loan and achieving your dream of owning. I have done some research on the new FICO Score formula and here are a few Pros and Con's on the subject. I've also included links so that you can read more and get a better understanding on the changes, when they will be happening and how they will potentially change the way lenders look at your FICO score.
Pros
Medical Debts
Debts Paid in Collection
Cons
Unpaid Debts on your record not related to Health Care
Harder to get personal loans or credit cards
Rising interest rates
Changes will not happen right away they are scheduled to happen later in the year 2015, early year 2016. Lenders will also take their time when evaluating the new FICO score formula. After all it is their money they are lending out and they want to make sure they make the best decisions for themselves.
The new score formula which will roll out will be called FICO Score 9.
Follow the link below for more information.
FICO Score 9 Introduces Refined Analysis of Medical Collections
Under the new formula, it's said that the typical credit score of 711 should raise about 25 points for people with medical debts. Those people who carry no medical debts would see little to no changes in their FICO score.
So what I have learned? if you have had hardships in the past and you have Medical debt that is lingering on your credit than you may now be able to qualify for a home loan based on the new FICO score formula. While the debt will still remain and you will still have to pay the debt at least it may present an opportunity to for you to qualify for a home loan under these new guidelines.
For more information here are some other helpful links:
FICO Credit Score Changes, Will yours go up?
3 Myths and 3 Truths About FICO 9
FICO Recalibrates Its Credit Scores
As always if you need more information or if you have any questions I can put you in touch with my network of lending professionals who can give you more information on securing a home loan.
Tina Medina | Pacific Real Estate Center
Realtor | CalBRE #01967279
call/text 619-322-8565
medinarealestate@outlook.com
