CoreLogic, FICO launch more predictive mortgage credit score

CoreLogic’s supplemental credit score in play

CoreLogic and FICO today announced the new FICO® Mortgage Score Powered by CoreLogic®, a “high-performance consumer credit risk score” that the companies say is expected to improve lending decision quality and improve the number of mortgage loans that lenders make.

The score evaluates traditional credit data from the national credit data repositories alongside the supplemental CoreLogic CoreScore™ credit report, introduced in October 2011, to deliver “a more comprehensive and accurate view of a consumer’s credit risk profile for loan prequalification and origination.”

The companies say the new scoring model was designed to better predict mortgage loan performance by better predicting risk as the CoreLogic CoreScore™ credit report includes far more than traditional reports, including data like evictions, applications for payday loans, child support judgments, property tax liens, the status of homeowner’s association dues, whether or not a borrower is underwater on their current home, or whether a borrower owns other properties that credit agencies typically miss.

As of October, the company was considering adding utility bills and cell phone bill payment histories to the new supplemental score.

FICO and CoreLogic say this helps the housing market

FICO and ComScore say that bankers continue to lack confidence in the housing finance marketplace, making the announcement of an improved scoring model that better assesses risk, quite timely. They say he new reports “will help mortgage lenders more safely and profitably expand their origination volumes, ultimately strengthening and growing the overall mortgage lending market.”

“In this complicated operating environment, lenders are increasingly turning to new data sources to help better interpret a consumer’s credit risk, so that more loans can be approved while mitigating potential losses,” said Tim Grace, senior vice president of product management at CoreLogic. “Today, we are announcing an industry first—a new composite, multi-bureau credit score generated from both traditional credit data and CoreLogic supplemental data, expanding the applicant credit spectrum by including property transaction data, landlord/tenant data, borrower-specific public data, and other alternative credit data.”

Grace added that “For a top-20 lender processing 300,000 applications a year, adopting this new score could translate into 3,900 more loans approved every year along with a net financial benefit of $14.5 million. As such, it not only provides a more complete and predictive evaluation of a consumer’s credit risk profile, but it can empower lenders to better mitigate risk and approve more loans for more consumers.”