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Mortgage lenders shifting how they look at credit?

Credit is one of the traditional factors lenders review when making decisions like whether to approve a person for a mortgage. Now, what kind of credit data mortgage lenders look at when determining mortgage eligibility and rates can shift over time. One type of data which could end up playing a bigger role in such decisions in the future is trended credit data.

This is data that goes beyond just looking at overall balances and whether timely payments were made when it comes to things like credit cards. Rather, it expands to looking at how a consumer manages a balance over time (such as whether they regularly carry a significant balance or pay off their balance in full on a monthly basis).

Recently, an automated underwriting software program that many mortgage lenders use was updated to factor in trended credit data. The program is Fannie Mae underwriting software. One wonders if this will end up spurring on widespread use of trended credit data when it comes to mortgage loan decisions by lenders.

As this illustrates, what sorts of credit-related factors can have major impacts on a person’s likelihood of qualifying for a mortgage loan is a constantly evolving thing. This is among the things that could cause a person to be unclear on how they act in a given situation could impact their ability to get a mortgage loan in the future. This includes how they act when it comes to struggles with a current mortgage they have. This is why a homeowner who is facing such struggles may want to discuss the implications (including credit implications and future mortgage eligibility implications) the different options they have for addressing the struggles would likely have.

Source: Bankrate, “New credit-scoring model: Trended credit data,” Holden Lewis, Sept. 29, 2016

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