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Homeowners use to smile at credit scores of 620, but that was before. Starting next month though homeowners and even real estate buyers will find themselves having a hard time having loan approvals with what they use to call good credit scores. This is due to the newly imposed rules for appraisers, brokers and mortgage lenders. A credit score of a mere 620 will get you nowhere nowadays. There will be a need for a more polished balance sheet and updated free credit report if a consumer wants to have loan approvals. It is as if the recession is not enough to burden us Americans! Now if you are currently thinking that you are on a safe mode because you are secured by a federal agency such as the FHA (Federal Housing Administration) or even the VA (Veterans Affair, industry Specialists still think that you have to be on the lookout. For a consumer to have the best interest rate will mean he has a steady income and a credit score of at least 720. These new rules regarding credit scores and loan application will start taking effect on Nov. 1 (for manually underwritten loans) and Dec. 12 (for those who used Fannie Mae¡¯s Desktop underwriter as the software will need to be updated). From then on, consumers who do not meet the new set of requirements will have a really hard time acquiring new loans. During the past years, a score of 620 was the dividing line of credit companies between good and bad scores. But due to studies done by experts showing that the excessive borrowing of irresponsible consumers might have been one of the causes of the current recession in America¡¯s economy, several actions like the raising of standards in loan application will have to take place. This is to avoid consumers from borrowing more than what they can really afford. With Fannie Mae (Federal National Mortgage Association) raising its standards, the present recession of the economy, what is left for American citizens then? Industry experts have only one thing to say, “American citizens should start working out their scores and start right now.” They believe that a polished balance sheet will not just boost scores but will affect the present situation of the economy as well. Higher scores mean that people are becoming more aware of the consequences of having a loan and therefore will become more responsible. On the other hand, if more people will mind their present credit standing and concentrate in having good credit reports, the 3 major credit reporting agencies (Equifax, Experian and TransUnion) will be giving higher credit scores and credit companies will have less to lose. This reverberating effect will be good for the present situation of America¡¯s economy.
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