While banks may be right to try to avoid repeating mistakes made during the housing bubble, an over-reliance on credit scores could create problems for the real-estate market. Banks shouldn’t be giving mortgages to borrowers who can’t afford to pay them back, but if people with sizeable down payments and solid sources of income are being turned down because of credit scores, that’s not healthy, either.
However, article doesn't cite the FHA program that does allow first time home buyers with bad credit to purchase a home. And this program is large since it's now 37% of all new mortgages to purchase homes.
The first cracks to to be looked at in the housing bubble were the sub-prime loans. These were given to people with bad credit. Now, the government is backing these loans. It really makes you think if we are not repeating history.