Fair Isaac Corp., the creator of FICO scoring, announced a
new score they are developing that is intended to make millions of additional
people credit worthy. Credit reporting giant Equifax and Lexis Nexis Risk
Solutions are providing alternative data to include utility bill, cable bill
and cell phone bill payment information.
This former “alternative credit” information now will have the potential
of contributing to a credit report that could open up FICO scoring to more than
53 million additional potential borrowers who, for various reasons, have not
previously been mainline users of credit, and thus, do not have a FICO
score. In the world of mortgage lending,
no FICO score means no mortgage.
Fair Isaacs has partnered with 15 of the top US credit card
issuers to agree to issue credit cards, based on the alternative credit
score. If the users don’t exceed card
credit limits and pay as agree for only 6 months, they will then receive a
standard FICO score.
This mortgage banker will watch the metamorphosis of the new
FICO score, with great interest, to see just how accepting FHA, VA, Fannie Mae
and Freddie Mac will be of this new “credit report”.
Forget about the congressional uproar over 3% down vs. 3.5%
down payments. This manipulation of the,
up to now, sacred FICO score could dramatically skew credit assessment as well
as risk analysis.
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