Memphis Area Real Estate Observers Note FICO Change

The lowering of Memphis area mortgage rates is providing an undeniable stimulus for area buyers—so any change in how lenders look at credit scores is automatically of interest. In that sense, this should come as interesting news: FICO is about to introduce two new scoring models!  

But actually, it’s likely to produce barely noticeable ripples. Among other reasons, the gradual introduction of the new FICO Score 10 and Score 10T won’t happen until this summer—and most lenders will wait a while before adopting them (if they use them at all). The difficulty confronting consumers seeking to track relevant details in the credit rating universe is well known. For instance, FICO 8 is still the most commonly used, even though its successor—FICO 9— debuted six years ago. Further complicating the picture is how the three credit bureaus use specialized FICO versions (a different story entirely!).

Basically, FICO scoring has to do with how different factors are weighted in formulating any given “score”—the number meant to predict the risk a lender would take when funding a loan. Each new model attempts to further refine the available data. Such improvements become possible as more information is made available—and in today’s Memphis area, the all-encompassing electronic nature of our day-to-day dealings creates more and more data.

Among other factors, the new FICO 10 will give more weight to personal loans. It will penalize borrowers who take out loans to consolidate debt if they then continue to rack up more debt. FICO 10T will tabulate “trended” data, taking the last 24 months of data to plot the “trajectory” it reveals. Memphis area consumers who have been paying off debts will score higher than those who rack up more during the same period.

As a practical matter, common sense is any Memphis area mortgage applicant’s best guide. That, and keeping a watchful eye on the reports that each of the credit bureaus (Equifax, TransUnion, and Experian) issue monthly. You can get information on how to obtain free reports from the Federal Trade Commission here. For a less mysterious look at a more straightforward topic, I’m happy to provide insights into the latest Memphis area real estate doings. Call me anytime!

About Author
Tim OHare

Tim O'Hare has over 15 years experience working with executive leadership as a digital marketing and technology specialist. Tim relocated to Collierville, TN where he began his real estate career with a sphere of less than 10. In his first 18 months, he was Rookie of the Year at his brokerage and a member of the Multi Million Dollar Club. Tim realized the best way he could give back was to help others unlock their potential, so that they feel empowered to accomplish their personal and professional goals. His passion to learn, coach and give back to the community is what shapes him as a leader. He brings a strong competitive mindset and understands the commitment necessary to accomplish even the most audacious goals. Tim currently lives in Collierville with his wife Anna and 2 boys. He's a member of the Collierville Rotary and serves on the Board of Zoning Appeals for Collierville. Tim also sits on multiple committees at the Memphis Area Association of Realtors.

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