Mortgage Daily Logo
mortgage news from industry experts

The Credit Wire

Credit reporting companies are scrambling to promote how their models will help lenders better predict the likelihood of default — though one company is playing the bureaus against each other to boost borrower credit scores. One new credit offering claims it will save mortgage lenders $1 billion, while another helps prevent mortgage fraud.

Advantage Credit International reported last month that credit bureau alternative scoring models return a higher credit score 72 percent of the time. The Pensacola, Fla.-based firm said its new ScoreChoice enables originators to order six bureau scores instead of just three.

Advantage said it compared the frequency with which alternative scoring models turned out a higher score than traditional models. Alternative models TransUnion, Empirica95 and Empirica98 were more often higher than Empirica04 — TransUnion’s default scoring model.

“Although credit bureaus scores are derived from the Fair Isaac Risk Model, the three repositories further calculate a borrower’s credit score using their own proprietary computation models,” Advantage said. “Each model has a trademarked name and they differ in what they mean to predict, the statistical methods used to determine a creditworthiness score, what data is used and how they are weighted. A bureau will often have two or three models for scoring mortgage reports.”

Fair Isaac Corp., which earlier this month re-branded itself as FICO, debuted last week FICO Score Trends, a new subscription service that enables lenders to regularly analyze their portfolios and drill down into a range of criteria including industry, geography and time period. The service was previously available only under a custom arrangement.

Experian terminated its relationship with Fair Isaac’s myFICO.com following FICO’s still-active 2006 lawsuit against the three major credit repositories over their competing VantageScore, the Washington Post reported last month. The move will reportedly prevent consumers from accessing the FICO score through Experian.

But then FICO announced earlier this month that it teamed up with Equifax to introduce BEACON Mortgage Score. The new offering, which will be available next month, was specifically designed for mortgage credit analysis and improves upon the accuracy of the traditional BEACON score by 25 percent.

“FICO scientists have developed a version of the BEACON score with significantly greater power for assessing mortgage repayment risk,” the statement said. “Early results suggest that the use of BEACON Mortgage Score by the industry potentially can save it $1 billion in foreclosure costs.”

VantageScore Solutions, LLC, reported that it analyzed 600,000 randomly selected 2001- and 2002-vintage originations that are still outstanding. A review of the performance of the loans during the five years after they were originated determined that three-quarters of the loans ranked by VantageScore performed consistently better than the top 75 percent ranked by the benchmark score. The bottom 25 percent ranked by VantageScore had a consistently higher delinquency rate than those ranked by the benchmark score.

FICO recently announced an agreement with the Pennsylvania State Employees Credit Union to provide free FICO scores to its 200,000 members, a news release last week.

In January, FICO announced that TransUnion became the first credit reporting company to offer FICO Risk Score, Classic 08. The new model is expected to double the predictive capability of the credit score.

The new score maintains a scoring range of 300 to 850, score reason codes and minimum scoring criteria. Inquiries are treated no differently than in the prior version. But Classic 08 reduces the impact from piggybacking — where borrowers are added on as authorized users of someone else’s account to artificially boost their credit scores.

Informative Research said Monday that its reports have been updated in an easier-to-read report format designed to highlight the most critical elements of a borrower’s credit history. Derogatory tradelines and all collection accounts now appear in bold, and the elimination of duplicate entries has reduced the overall report length by as much as 20 percent.

Tri-merged reports from Kroll Factual Data will now include an identity verification product, a March 3 announcement said. FactualID utilizes the borrower’s name, social security number and property address to assesses the risk of identity and occupancy misrepresentation.

A statement Tuesday said Kroll had teamed up with MRG Document Technologies to provide MRG customers with access to Kroll’s risk assessment services — FactualID, FullFacts and CollateralFacts. The services will help lenders prevent mortgage fraud and comply with the Red Flags Rule.

United Fidelity Funding Corp. signed up as a customer of Loan-Score Decisioning Systems, a press release last week said.

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts

THE TRUSTED PROVIDER OF ACCURATE RATES AND FINANCIAL INFORMATION