Earlier this week, Fannie Mae announced a decision that has major implications for mortgage applicants. Specifically, starting in mid-2016, Fannie Mae is going to require that lenders use trended credit data when assessing consumer loan requests. This could benefit mortgage borrowers because lenders will have a more detailed view of a borrower’s historical credit performance.
It’s an important and innovative advancement, as the picture that trended credit data paints of a consumer could help mortgage lenders provide more loans that might help millions of people access opportunities that lead to a better quality of life.
TransUnion recently did a study analyzing the use of trended data and found that this enhanced information could potentially impact vast numbers of consumers in the housing market through better pricing and greater access to mortgage loans.
The research showed that the percentage of consumers in the Super Prime tier would increase from 12% to nearly 21% of the U.S. adult population. This score tier represents the lowest risk group and those who generally have the greatest access to new loans at the lowest rates.
Using data in innovative ways helps lenders approve more consumers with better loan terms and we’re excited Fannie Mae is aiming to enhance offerings so qualified borrowers have access to mortgage credit.
For recent posts on this topic visit the Trended Data insights blog feed and watch a video of Chris Cartwright discussing the Fannie Mae news.
Earlier this month TU released CreditVision® LinkSM, the first credit score in market to combine both trended credit bureau data and alternative data sources. The combined information creates a more precise picture of consumer risk a consumer’s and ability to manage financial commitments. This hybrid approach allows lenders to score approximately 95% of the U.S. adult population, including tens of millions of consumers who cannot be scored by traditional credit scores and therefore can’t get access to credit.