Wells Fargo has already reduced minimum score
With the recent news of the slight economic uptick, I thought this would be a good opportunity to share an article from the Chicago Tribune. Last month, the newspaper reported that many banks are considering loosening their credit score requirements for mortgages. Wells Fargo has already reduced their minimum score for an FHA loan to a 600 FICO. More emphasis is being placed on an applicant’s debt to income ratio and employment history. Borrowers have shown to be more financially responsible in the current economic climate than when the recession hit, which gives lenders increased optimism that they will see their loans paid back on time.
This is welcome news for the credit repair industry, as your customers should be seeing real-world benefits quicker than during the worst of the recession. As more lenders open up their vaults to borrowers with sub-700 FICOs, your hard work will be rewarded with satisfied clients and a potential new referral stream. The credit repair industry is extremely important to the financial well-being of thousands of consumers; it is nice to see that lending institutions are allowing creditworthy buyers easier access to capital. As previously mentioned in another post, Americans have fallen on hard times often due to circumstances beyond their control, such as a catastrophic accident or illness in the family.
Of course, relaxed standards still do not fix the fundamental problem of inaccurate and outdated information on Americans’ credit report. Just because more people are likely to be approved for loans, doesn’t mean that the credit repair industry should be any less vigilant in ensuring accuracy. Your customers will absolutely still be better off with an excellent score; the differences between interest rates can still be hefty between preferred and standard borrowers. Increased lending on the part of banks and other financial institutions is not a cure-all, but it is indeed a step in the right direction.