What the new FICO scoring system means for homebuyers

Recently, FICO, one of the largest credit scoring companies in the world, announced that it will be rolling out a new credit scoring system in 2023. This new system, called FICO 10 T, aims to provide a more accurate picture of a consumer’s creditworthiness by taking a more holistic approach to credit scoring.

So, how will the new FICO scoring system affect home buyers? Let’s take a closer look.

What is FICO 10 T?

FICO 10 T is the latest version of FICO’s credit scoring system. It will use the same 300-850 point scale as previous versions of FICO, but it will take a more nuanced approach to credit scoring.

FICO 10 T will look at trends in a consumer’s credit behavior over time, rather than just their current credit utilization and payment history. This means that if a consumer has a history of responsible credit behavior, but experiences a setback like a missed payment or a high credit utilization rate, their score may not be as negatively impacted as it would have been under previous FICO scoring systems.

Additionally, FICO 10 T will differentiate between consumers who have revolving credit (like credit cards) and those who have installment loans (like mortgages or car loans). This is designed to recognize that consumers who have successfully managed installment loans may be better credit risks than those who only have revolving credit.

How will FICO 10 T affect home buyers?

The new FICO 10 T scoring system could have several impacts on home buyers.

First, consumers who have a history of responsible credit behavior but have experienced a setback (like a missed payment or high credit utilization rate) may see less of a negative impact on their credit score under FICO 10 T than they would have under previous FICO scoring systems. This could make it easier for these consumers to qualify for a mortgage or secure a better interest rate.

Second, consumers who have successfully managed installment loans (like mortgages) may see a boost to their credit score under FICO 10 T. This could make it easier for these consumers to qualify for a mortgage or secure a better interest rate.

Third, lenders may be more willing to work with consumers who have less-than-perfect credit under FICO 10 T. This is because the new scoring system takes a more nuanced approach to credit scoring and recognizes that consumers who have had setbacks can still be good credit risks.

FICO scoring system and homebuyers

The new FICO 10 T scoring system could be good news for home buyers. Consumers who have a history of responsible credit behavior may see less of a negative impact on their credit score if they experience a setback, and those who have successfully managed installment loans may see a boost to their credit score. Additionally, lenders may be more willing to work with consumers who have less-than-perfect credit. However, it’s important to remember that credit scores are just one factor that lenders consider when evaluating a mortgage application, and other factors like income and debt-to-income ratio will also play a role in the lending decision.

Interested in starting the home buying process? Click here to connect with a Sage & Cedar agent!

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Let’s look at the 5 reasons why you should invest in Atlanta Real Estate

01. The city has everything it needs to continue to do well – Industry, culture, education, professional sports, and theater to name a few. It’s extremely diversified which means it can weather most economical storms. 

02. Atlanta continues to grow so fast that it manages to attract and keep many global companies within the city – There is still so much room for growth here. The earlier you get in, the more equity you can build. Just think, 10 years down the road you’ll want to look back and be thankful. you invested when you did.

03. There’s a lot of beautiful green space and people can choose to live near nature or near downtown – Atlanta and the surrounding suburbs offer so many choices for potential homeowners. Looking to spread out and still be close to the action? There are so many neighborhoods less than 30 mins from the middle of town. 

Atlanta and the surrounding suburbs offer so many choices for potential homeowners.

04. Plenty of people are moving to Atlanta – This inbound influx is always a great indicator when you’re investing. This kind of equity opportunity rivals larger cities like New York or LA. 

05. A lot of investment property in Atlanta can be purchased at an affordable price – There’s a tremendous potential for value. So many different home styles and neighborhoods gives home buyers a large variety of investment opportunities. 

What questions do you have about real estate investing? Leave ’em in the comments.⁠ Or are you interested in connecting with a Sage & Cedar agent? Click here to learn more!

Want to search the newest listings right now? Start here!

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Here’s what you need to know:⁠

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01. Investors looking to operate short-term rentals are now required to have a permit⁠.

02. The permit is only valid for 2 properties (one of which must be the investor’s primary residence).⁠

03. Investors must be a resident of Atlanta to operate a short-term rental in the city⁠.

So what does this mean for you on your home search?⁠

Since most investors are cash-ready, their offers are more likely to be accepted. But…⁠
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Now that the city has gotten more strict on who can operate short-term rentals & how many they can operate at one time, this means you’ll have less competition with investors.⁠
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Which ultimately means you have a MUCH better chance of securing your dream home!

Interested in starting the home buying process? Click here to connect with a Sage and Cedar agent. They can take you through the process, talk to you about lenders, closing costs, and the current market!

Want to start your home search online? Click here!

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