FICO Introduces New Mortgage Credit Score
A new FICO mortgage credit score unveiled Tuesday casts a wider net to capture consumer behavior not previously considered in whether to grant a home loan. The agency says it will make more people eligible for a mortgage, but critics say that wider net may pull in new inaccuracies and create additional privacy concerns.
On July 10, the consumer credit score giant FICO joined with data firm CoreLogic in announcing the new score designed specifically for mortgage lenders called the FICO Mortgage Score Powered by CoreLogic. The mortgage score is based on information provided by CoreLogic in a detailed report called the CoreScore Credit Report.
The report includes information that other credit reporting agencies, such as Experian, TransUnion and Equifax, don't factor into your traditional reports. If you were late on child support payments, applied for a payday loan or had trouble paying your rent on time, it could show up on your CoreScore Credit Report and be factored into your new FICO mortgage score. But on-time payments on a second mortgage will also be factored into your score, as well as all those months you paid your rent like clockwork. It's not intended as a replacement for traditional FICO scores, but as another tool for mortgage lenders to use early on, at the prequalifying stage for borrowers."It's simply bringing in additional data," says Joanne Gaskin, a director of product development at FICO.
"The level of detail is unbelievable," says Mark Munzenburger, director of education at the credit counseling agency GreenPath Debt Solutions. Consumers will be surprised by just how much information about them is out there, he says. "Consumers really need to be aware that, more than ever, everything they do with respect to their finances is somehow tracked and kept in a database."
Is it good for consumers?
Critics say the extra information in the CoreScore credit report unfairly hurts consumers who have already been knocked down by the economy, especially those with lower incomes. "When you're including things like evictions and child support, that's going to affect those who are at the lower end of the economic spectrum," says Emil Fleysher, an attorney in South Florida. "Those who are going through divorce, anyone with an underwater [mortgage], anyone who bought or refinanced property between 2004 or 2007, is going to be at risk."
"The past three or four years, economically, have been a challenge," adds GreenPath Debt Solution's Munzenburger. "So when you've got folks who have struggled with on-time payments or because of unemployment or disability, when you really kind of boil it down, this report will magnify those problems. It will probably make it a little bit harder for people to rebuild that credit quicker."
Read more: FICO Introduces New Mortgage Credit Score | Fox Business
|All times are GMT -5. The time now is 11:44 AM.|
Copyright 1997 - 2013 - BlackandGold.com