An upcoming change on credit reports could be beneficial for homebuyers.
Equifax, one of the nation’s three leading credit reporting bureaus, recently announced the addition of up to two years of debt balance and repayment history on its credit reports. The change became effective Sept. 24, 2016.
The change, Equifax stated in a release, will impart heightened understanding of creditworthiness as it relates to approval of a loan. Recent research out of Fannie Mae shows that borrowers who pay off their credit card debt every month are 60 percent less likely to become delinquent on their mortgage, compared to borrowers who only make the minimum payment. Including debt balance and repayment information in the report will give mortgage lenders deeper insight when evaluating an application, beyond assessing the applicant’s credit score.
“For nearly three decades, mortgage lenders have used the same static formula to determine whether or not someone receives a home loan,” stated Craig Crabtree, general manager of Equifax Mortgage Services, in the release. “Leveraging trended credit data to evaluate how borrowers actually manage and pay off their credit debt could have enormous potential in terms of opening up credit and providing many Americans with access to mortgage loans that they previously may not have qualified for.”
Planning to buy a home soon? Contact me today to discuss your credit and lending options.
Published with permission from RISMedia.