The Bibel Team: Credit Score Updates

Eric: Hey everyone. Eric Bibel with the Bibel team at NEO Home Loans. And today I want to talk to you about advancements in how credit scores are dictated in mortgage finance. If you like the content that you’re seeing here to today, please like, subscribe, follow, comment. It helps us be able to continue to put our message out.

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We’ve been getting a ton of questions around some recent advancements in how credit scores are reviewed in mortgage qualifications. So, the mortgage process for credit verifying of yesterday, you had two borrowers that would come as applicants, and apply together. We would run both their credits and we would take the lowest middle score of the two applicants. So if you had one person with a high FICO score, say over 760 and the other individual with a FICO score say, under 680, the lender would only consider the lower of the two. Now understand credit is credit. Look at our other content on how to further improve your credit. But hey, you were in that situation, that was what you were left to deal with.

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Credit score in conventional financing is really tickets to the game. It dictates loan program, dictates the down payment requirements, dictates the price point that you can purchase, but more importantly, the interest rate and mortgage insurance cost. So ultimately, that lower credit score would’ve meant you paying a higher monthly premium. So fast forward to where we are today. So as of September of 2021, there’s been some significant advancements on how that scoring model is reviewed.

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So, same two applicants, 760 FICO score, sub 680. They come together and again, before we would have to take the lower of the two scores. Today, we get to average the two. Huge improvement. So you get to harmonize the two individuals together and take the middle, the average of those two scores, which again can significantly improve loan program placement, down payment, availability, interest rate options, and mortgage insurance if you’re putting less than 20% down. Which again can expand in which purchasing power you, the borrower world have.

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Tons of awesome advancements. Again, we spoke before on credit. So if you are running into questions, if you’re in that process of wanting to help advance your credit profile, please get in touch with a mortgage professional today. They can help put you on the right path. But know, if you’re already down the rabbit hole, there are options for you. Now we would love the opportunity to dig deeper into this with you. Please reach out to my team and me today. Thank you.

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