Although the change is unlikely to be immediate, in the years ahead, Delaware residents who are seeking a home mortgage may be able to do so with lenders who use alternatives to FICO in determining credit scores. The bill is cosponsored by a Republican and Democratic senator and would require Freddie Mac and Fannie Mae to consider such alternative credit scores as FICO ScoreXD or the VantageScore.
While the traditional FICO score looks at credit card payments, mortgages and other loans, these alternative credit scoring methods examine a larger variety of payments including those for rent, utilities and cell phones. This may make mortgages more accessible to people who have not built a credit history in the traditional way. There have been efforts to introduce similar measures for several years. According to the Consumer Financial Protection Bureau, 26 million people lack a credit history with a credit reporting agency. Furthermore, the credit history of many people is not substantial enough to create a credit score.
Some objections have been raised. The National Consumer Law Center says that the bill may not solve some problems associated with traditional credit ratings because the data may be inaccurate or some credit ratings could be lower. If the bill does go into effect, the Federal Housing Finance Agency says it will not take effect until 2019.
Mortgages and purchasing a home may feel particularly overwhelming for first-time buyers, but it can be a complex process even for those who have experience. Selling a home can be complex as well. It is necessary to have the correct legal language in all documents, and people who are buying or selling a residence might want to work with an attorney to ensure that all legalities are observed.