It was going to happen sooner or later…Fannie Mae is raising its minimum score to 620 from 580 and lowering its maximum debt-to-income ratio to 45% to reduce future defaults.
Your debt-to-income (DTI) is calculated, basically, by taking the amount of money you earn each month versus the amount of money you pay out on your obligations.
The underwriting changes go into effect the weekend of Dec. 12 as part of an update to Desktop Underwriter, the GSE’s automated underwriting system.
“The adjustments reflect careful analysis of a borrower’s ability to repay their mortgage obligation over the life of the loan,” said Fannie spokesman Brian Faith.
Fannie claims that borrowers with scores below 620 are generally nine times more likely to become seriously delinquent than other borrowers. Faith went on to say that, “in modifying loans, we have seen too many borrowers where their other consumer debt has jeopardized their success at home ownership.”
Now, more than ever, is the time to get your credit under control. If you have issues, you need to deal with them now! FICO ’08 is only going to make things worse for those people who have credit challenges.
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thanks for the info, though i never use credit until i don’t have cash with me, i always prefer for cash envelopes as you never have to face with dead lines and tax rates.
That’s great because whenever I’m going to use credit, I have enough knowledge and can be able to control it to avoid any possible troubles.
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