As I discussed on Tuesday, FICO is changing some things in their scoring models. They will be excluding medical collections and paid collections when calculating FICO scores, meaning many people will see a significant increase in their credit score. So if you did not qualify for a mortgage a month ago, when these rules changes are effected in the fall, you may qualify.

But just because you may be eligible in the fall does not mean you will remain eligible indefinitely. Eventually, the lending institutions will catch up with this and change their policies regarding mortgages. If the average FICO increases by 20 points, it stands to reason that the lending industry will increase their requirements by a similar amount. They will want to keep the requirements the same after the rules changes as they are now.

They will not, however, act right away. They will take the time to understand the ramifications of a change and see how the changes impact the application process and approval process for new home buyers. And while that will not be a 1 or 2 month process, it will be relatively quick, so as to avoid potential downside risk.

This is why, if you think these changes will impact you, you want to act now. Rates are low, houses are still at a decent price, and the FICO boost will not be beneficial forever. The worst thing I can think of is wanting to own a house, seeing an opportunity to overcome some credit issues with these new policies, then missing the boat because too much time passed.

If you have any questions about how the changes could impact you or about how to get prequalified for a mortgage, please contact me. If you have anything to add about the new FICO changes that are coming, please leave a comment.