Lenders May Be Cherry-Picking High FICO Scores
EDGEWATER, NJ, Sep 25, 2015 (Marketwired via COMTEX) — Lenders are claiming that they are willing to accept lower scores, but reports are saying otherwise. In a report by Ellie Mae Inc., a mortgage-software company, found that the average FICO credit scores on nongovernment and government-backed mortgages for home purchases have risen.
Ellie Mae Inc. produces a monthly report on accepted and rejected loan applicants. Last January, the average FICO score for accepted applicants was 752. In July, that number increased to 757 — a number higher than any month in 2014.
While investors like Fannie Mae and Freddie Mac have a 620 FICO score as their acceptable minimum credit score, lenders are free to set their own minimum. The reports suggest that consumers who are on lower end of the acceptance range are not getting approved.
This trend should encourage consumers to pay close attention to their credit scores and be diligent to avoid harmful practices. When shopping for a loan, it would be wise to limit the number of applications that you submit. Multiple submissions can result in a high number of hard inquiries from credit companies. These hard inquires will lower your credit score and hurt your chances of being funded.
Companies like Equipment Vine work to combat this problem by offering business owners and credit seekers a marketplace to compare rates without multiple credit pulls.
Though credit companies are advertising that their lending requirements have eased and credit scores are impacting these decisions less, the statistical evidence is suggesting otherwise. When it comes down to who gets approved and who doesn’t, it is increasingly people with high scores on average, not lower, who are receiving loans.
About Equipment Vine Equipmentvine.com was set up to service the needs of the consumer and the interest of the lender. Small business owners can use Equipment Vine to navigate through the numerous lending options and find a loan that best suits their needs while keeping their credit score protected. For more information, visit equipmentvine.com
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SOURCE: Equipment Vine
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