Fannie Mae Creates Stricter Loan Requirements

Fannie Mae, the largest U.S. home funding company, announced on Monday that it will require a minimum credit score for loans it buys individually.

Fannie Mae uses credit scores as an indicator of how likely a customer will pay on timely basis. Fannie Mae is now requiring a minimum of a 580 credit score for most loans, and a few loans under special circumstances for under that score.

They are also lengthening the period needed for borrowers to reestablish their credit history after a foreclosure to five years from four years. If borrowers have "documented extenuating circumstances" which caused the foreclosure, that time might be shortened.

Fannie Mae is the largest provider of money for U.S. home loans.

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For tips on raising your credit score, see our previous blog post:
Raise Your Credit Score Before You Apply For A Loan