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Credit Scores Going More Personal

Posted by Benjamin Dona on Friday, October 21st, 2011 at 6:01pm.

Credit Scores Going More PersonalFair Isaac Corporation and data provider CoreLogic announced last week they are collaborating on another new credit score that will focus on sharing more personal consumer information with mortgage lenders next year. FICO scores are the industry standard for determining credit risk on mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration and this move is intended to provide a separate score that will incorporate information from sources like payday loans, evictions and child support payments. Future additions will likely include information on things like the status of utility accounts, rental payment histories and even cell phone account payments.

Separately, last month, the big three credit reporting agencies, Experian, Equifax and TransUnion, began providing estimates of consumer income as a credit report option. And earlier this year, Experian began including data on on-time rental payments in its reports. The question with these changes is will this additional reporting on consumer transparency, both good and bad, have its place. Researches think it will. Critics think it puts too much emphasis on a single number.

Considering the change is coming at a time when the average FICO scores of homebuyers who qualify for loans continues to rise and as mortgage lenders reward the most creditworthy borrowers with low rates and tack on extra fees onto loans for those with lower credit scores, only time will tell the tale on this one.

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4 Responses to "Credit Scores Going More Personal"

Mike from Indianapolis wrote:
Wow, that's interesting news, and somewhat of a double-edged sword in the sense that it's good for lenders, but also another step toward even less privacy. Ultimately, I would have to think these new data would make for sounder underwriting decisions.

Posted on Thursday, November 10th, 2011 at 7:16pm.

Benjamin wrote:
It will definitely help with the first timers. However, with the way lending has turned for the worse in terms of options and turnaround times, I can see where this will most likely just become another pitfall in the process.

Posted on Friday, November 11th, 2011 at 10:58am.

Rich Cederberg wrote:
I wonder how long before they start including information from Facebook and Twitter. Isn't there some protection against using Child Support payments against someone to determine credit worthiness?

Posted on Saturday, December 24th, 2011 at 2:16am.

Benjamin wrote:
Evidently not! Some states (Illinois) even use these payment histories as a negative mark against certain types of license renewals.

Posted on Saturday, December 24th, 2011 at 9:42am.

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