Dallas Consumer Credit Attorney's Response to the FICO 9 Announcement

 
DALLAS - Aug. 11, 2014 - PRLog -- On August 7, Fair Isaac Corporation announced a major change to the FICO credit scoring model to be unleashed this fall. It is called FICO 9. The hype surrounding the release over shadows the reality that most consumers face in obtaining a mortgage. In fact, Mr. Guillermo Ramos, a Dallas Consumer Credit Attorney does not believe it will change the system much.

Despite the hype, most likely nothing will change in the mortgage buying process unless lenders adopt the new formula. Mr. Ramos does not believe lenders will be quick to adopt the new formula. Currently most lenders use FICO 4 which is a model from 2004. Mortgage lenders are accustomed to the older model and have real data that support that it is a good model for its lending decisions. Fair Isaac will have to overcome years’ worth of data to prove that the new model will more accurately predict a borrower’s ability to pay back a mortgage on time.

Lending is more than just a credit score. Lenders often sell the loans to other investors and these investors may have additional requirements beyond a credit score. Currently, many investors require that there are not more than $2,000.00 in current collections appearing on a credit report [not including medical items]. So even if the new FICO 9 does ignore medical and paid collections there may be more for a consumer to resolve before they can obtain their mortgage.

The news creates confusion in the market place because many consumers think that they can magically obtain a mortgage under the new formula. Many consumers only read the headlines so they may rush to pay debt collectors in hopes of getting a mortgage sooner. Under the current formula, if a consumer pays a debt collector then their credit score can actually be lowered causing them not to qualify for the mortgage. They will not get the mortgage they though. Only if lenders adopt the new model can borrower’s score increase. Adoption by lenders will take months to years from now.

Consumers should always be aware of their credit and hype surrounding news about changes to credit score information.

Consumers should:

Seek legal advice from a Consumer Credit Attorney before paying debt collectors.

Seek assistance from a professional mortgage advisor before settling any debt.

Should be wary about paying any debt collector without obtaining a deletion from the credit report

Ask their potential lenders what credit scoring model they are using.

The Ramos Law Firm [http://www.txclf.com] represents clients with credit problems in resolving the issues with their creditors, real estate law, business law, and general legal counsel. We strive for Fair Credit Reporting Act (FCRA), Fair Credit Debt Collections Practices Act (FDCPA), and Fair and Accurate Credit Transactions Act (FACTA) rights. Their team’s passion for representing clients and achieving goals is evident in everything they do. You can contact The Ramos Law Firm about credit issues at (214) 556-2300 or cs@txclf.com. You can reach Guillermo Ramos directly at (972) 201-9977 or ghr@theramosfirm.com

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Chris Ebert
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2145562300
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