A New FICO Score?

In October 2011, CoreLogic announced a new credit report named the CoreLogic CoreScore™ and that FICO would develop a mortgage score using this data.  In July 2012, FICO completed the development of the Mortgage score.  CoreLogic provides information, analytics and business services, and FICO invented the credit score.

Data Sources

Data in the CoreScore includes proprietary data and credit reports from the three major credit reporting agencies – Equifax, Experian and TransUnion. Proprietary data includes property ownership and mortgage obligation records; property legal filings and tax assessments; landlord/tenant transactions and evictions; alternative lending activity; consumer-specific property and tax liens; Judgments and child-support obligations; and bankruptcies.

Predicts mortgage risk

The score has the same ranges as the FICO scores, which are from 300 to 850.  The mortgage score was developed to predict how consumers will pay their mortgage. The higher the score is, the lower the risk of becoming delinquent 90 days or more.  This score uses more than the traditional credit information and was designed to be used with the FICO score to provide more information on the consumer to enable them to qualify for a mortgage.

This data will help evaluate those with little or no credit information. The additional data such as renter information can be used to help make a mortgage decision.  This only will be an advantage to consumers with positive rental information and if the landlord reports this information to CoreLogic.  In addition, the mortgage lenders and brokers can only purchase the mortgage score and the CoreLogic CoreScore™ credit report from CoreLogic.

Mortgage lenders use credit data and scores based on the data from the three credit reporting agencies. The credit data from all three agencies are merged in a report, but the scores are reported and calculated separately. The traditional FICO scores have been endorsed by Freddie Mac and Fannie Mae; they require that FICO scores from all three agencies be used as one of the key factors in loan underwriting. This new FICO mortgage score will need their endorsement, before it replaces the traditional FICO score used by the mortgage industry. In the meantime, the FICO Mortgage score will supplement the classic FICO score.  If Fannie Mae and Freddie Mac don’t accept this score, the mortgage industry probably won’t use it.

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Editor’s Note:

The new mortgage FICO score will most benefit those with little to no credit history, given that additional data (such as rental history) will be provided to determine the score. That is, of course, if Fannie Mae and Freddie Mac decide to adopt this new scoring method.

-Captain SuperMoney