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New credit score models could mean more people now qualify for home loans

Mortgage lenders will be required to incorporate scores from new scoring agency
Posted at 3:52 PM, Oct 27, 2022
and last updated 2022-10-27 15:52:42-04

WEST PALM BEACH, Fla. — During a time when affordable housing is hard to find in South Florida, two new lender credit models could mean millions more Americans now qualify for home and other loans.

"I feel like I'm forced into basically living in my car," April Wade told WPTV in May.

WPTV has extensively reported on the South Florida housing crisis through its "Priced Out of Paradise" series.

"I'm just blessed that I have this to sleep in," Katie Rister said in August, talking about her car. "Without this, I'd be on the street."

Renters and hopeful home buyers have been feeling the pinch. The rising cost of housing is forcing a lot of people out of South Florida.

Now, more than 10 million people could qualify for mortgages thanks to upcoming changes to lender credit models.

The Federal Housing Finance Agency said it will now require mortgage lenders to incorporate credit scores from FICO and a new credit scoring agency VantageScore.

"Right now, our credit reports are a snapshot in real time," Paul Oster, founder of credit management firm Better Qualified, said.

Paul Oster, founder of Better Qualified credit management firm, speaks to Jessica Bruno, Oct. 27, 2022
Paul Oster, founder of credit management firm Better Qualified, speaks to WPTV consumer investigative reporter Jessica Bruno about a new requirement that could help more people qualify for home loans.

Oster said that could soon change because these new credit score models will incorporate things like a one-time rent or utility payment and cellphone payments that previously weren't included in a person's credit score.

"It's going to go back 24 months to look at your credit card balances, what you've been doing for the past two years," Oster said. "We're hoping that it's going to help some people that don't have a lot of traditional credit accounts reporting on their credit reports."

However, Oster said, a few things need to happen before this new plan comes to fruition.

SPECIAL SECTION: 'Priced Out of Paradise'

"We're just hoping that A, it really does pan out for the average consumer, and are the government agencies really going to require lenders to use these scoring models?" Oster said.

If they do, Oster said, even with mortgage rates at a two-decade high right now, this will still help a lot of people finance their next home.

"There are millions of people (who are) not even on the FICO score radar," Oster said. "They don't have a credit score because they haven't used traditional banking accounts, but that should not, you know, discriminate against them in terms of, you know, buying a home."

Oster told WPTV there is currently no deadline for the government to set requirements for lenders to use these new scoring models.

WPTV will be following this developing story.