I read your recent piece regarding the credit changes coming in July. But since then I seem to be hearing different information regarding what is actually happening. Is there something new?
–Bud from Cleveland
For this question, I have called back in Chad Kusner, our credit expert. Chad is a board member of NACSO, the National Association of Credit Services Organizations – which advocates consumer protection and ethical business practices for the credit repair industry and heads Credit Repair Resources (http://crr760.com/) Let's see what Chad has to say.
You might recall from my last update, in July, that the credit bureaus started removing some judgments and tax liens from credit reports if they are not supported by the data that is required. Several follow-up pieces of information have come out. For one, lenders have the option to obtain this data from third-party providers such as LexisNexis. A lender can't necessarily add the data back to the credit reports, and thus the higher scores would remain. But the data could factor into decisions. Fannie Mae has stated that they are not requiring lenders to obtain the data independently – for now. In the same Lender Letter, Fannie indicated that they are going to be studying the information and looking for feedback from lenders. Thus, they have not ruled out such a requirement.
Meanwhile, FICO has released a study of millions of credit files to determine what affect this change will have on credit scores. The answer ranges from 20 points for those who have data removed, to 60 points or more for a smaller group. Of course, it is impossible to predict what change will occur because FICO scores are a moving target.
Finally, one unrelated change is being implemented by Fannie Mae. Disputes will no longer have to be investigated by lenders if the file received an accept through DU. Between the two changes being implemented, the bottom line is that your prospective borrowers have received good news regarding their chances for approval.
Dave Hershman has been the leading author and a top speaker for the industry for decades with six books authored and hundreds of articles published. His website is www.originationpro.com. If you have a reaction to this commentary or another question you would like answered in this column? Email Dave directly at [email protected]
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