FICO Scoring Changes Affecting Mortgage Loan Access

Attention Future Homebuyers:

  • New FICO Credit Scoring Formula Likely to Drop Scores and Affect Loan Approval for Millions
  • Personal Loans, Credit Card Use, Missed Payments, and High Debt Utilization Ratio Among New Scoring Criteria
  • Prospective Home Buyers Being Urged to Contact HomeOwnership Center

Elkins, West Virginia – Last week, HomeOwnership Center received news that big changes have been made to how consumer credit scores are being calculated in FICO’s most recent scoring model update with likely impacts for prospective homebuyers. While the previous FICO update boosted credit scores across the board, the new FICO 10-T’s calculation criteria is expected to negatively impact millions of borrowers by decreasing their current credit scores, which carries the potential for subsequent loan denials and higher interest rates. Those expected to experience the most negative impact include individuals actively accumulating debt, missing payments, and applying for personal loans.

“It’s a significant change to the scoring, and will have different effects on different types of borrowers. We work with people of all income levels and credit histories, and they really should be informed about this.”

–Tawnya Holbrook, Home Ownership Advisor, HomeOwnership Center

Under FICO 10-T, some of the more notable factors likely to negatively impact consumer credit scores include late/missed payments on outstanding loans and debt, penalization for individuals who formerly paid off their credit each month but begin carrying a balance forward from month to month, and point deductions for borrowers of personal loans who transfer high-interest debt (such as an outstanding credit card balance) into the loan, then continue accumulating debt. Consumers being hit the hardest are expected to include those with the highest credit utilization ratios (the percentage of available credit used).

“We want to make sure people are aware of the recent changes so they can take the right steps to be successful homeowners – and, ideally, our goal is to see them be able to get the best rate, too. At HomeOwnership Center, financial counseling is a big part of what we do and we are encouraging all prospective home buyers to stop in and equip themselves with the information and tools they need to reach their goal of buying a home because it’s really such an important part of overall financial stability.”

— Tawnya Holbrook, Home Ownership Advisor, HomeOwnership Center

HomeOwnership Center provides confidential financial counseling services to help area residents of all income levels access and review their credit report, understand how it affects their FICO score, and help them establish and improve their credit rating.

HomeOwnership Center also provides financial education, credit and budget counseling, home buyer and homeowner education classes, a first-time home buyer program, and assistance securing the best mortgage loan to meet their needs. Because the recent FICO scoring changes are expected to most significantly affect those individuals with limited credit histories, lower incomes, and higher income-to debt ratios, HomeOwnership Center is encouraging individuals who meet these criteria, as well as all prospective home buyers, to reach out for assistance navigating the recent changes. For more information, please contact HomeOwnership Center.

HomeOwnership Center

ELKINS, WV 26241
Phone: (304) 636-9115
Fax: (304) 636-4125
[email protected]

About HomeOwnership Center

HomeOwnership Center was founded in 1998 with the mission to strengthen local communities by creating and supporting successful homeowners through mortgage lending, financial advising, and home buyer education. Our vision is to make the dream of homeownership a reality for the people of our community. We proudly serve residents of Barbour, Lewis, Pendleton, Pocahontas, Randolph, Tucker, Upshur and Webster County, WV.