When you apply for a mortgage loan, a lender will typically run a credit report in short order. From the credit report, the lender will most likely look to your FICO® score. FICO® is a scoring system used by the three major credit bureaus to determine your eligibility for the loan you are seeking. For decades, credit scores have been largely based on a person’s past dealings with banks and other financial institutions.
However, if you have never taken out a loan or owned a credit card, or you are just starting to build your credit, lack of credit may also affect your ability to be approved for a loan. With the aforementioned considerations in mind, FICO® recently debuted a new opt-in scoring system known as the “UltraFICO™ Score.” By linking their checking account, savings account or money market accounts with FICO®, users have the opportunity to build credit based on the data they share. When determining whether an applicant poses a credit risk, lenders now have the opportunity to consider — along with more traditional categories — evidence from savings, account balances, bank account history and any other transactions.
UltraFICO™ Score is especially helpful for both younger consumers with little credit history and those who’ve previously dealt with low credit scores. If you already have good credit and a well-established credit history, it is unlikely you will see a significant boost from an UltraFICO™ Score. According to FICO®, seven out of 10 consumers with average savings of $400 and without negative balances in the past three months see an increase in their FICO® Score with the new system.
The announcement of broader scoring modalities comes on the heels of a comprehensive effort to expand access to credit. Late last year, Experian rolled out Experian Boost, a new tool that enables consumers to incorporate utility and cell phone payments into their credit history and potentially increase their FICO® Score instantly. To learn more how you can benefit from these latest credit models, click here and here.
Equifax, along with TransUnion and Experian, is one of the three major credit bureaus that determines consumer credit scores. With a goal to “power the world with knowledge,” Equifax seeks to provide data and analytics that will enable intelligent business and financial decisions. Equifax strives to create innovative global solutions to social economic challenges while fostering healthy financial communities. With its breakthrough analytics capabilities, Equifax has created tools used to mold financial processes into faster, more insightful and more flexible journeys.
Adapting to new loan regulations and increased debt in areas such as potential homebuyers’ student loans, Equifax developed Equifax eMortgage that provides lenders with immediate detailed information on their potential borrowers’ credit history. However, Equifax wanted to go a step further with eMortgage and save loan officers the time required to search further for customer intelligence.
By combining credit, income, employment and property data, eMortgage creates a comprehensive view of each borrower. By removing time-consuming tasks from the loan origination process, Equifax eMortgage helps loan officers spend more of their day finding new clients instead of focusing on administrative roles. As part of the eMortgage service, Equifax offers online tools to help close more loans through consumer information solutions. Credit Assure presents findings on every single file so that time is never wasted scouring credit reports. CreditXpert Essentials works in a different way, presenting information on credit reports to borrowers so borrowers can fully understand their credit during the loan application process. By providing this already-prepared analysis and not having to go through the details with each borrower, mortgage planners save valuable time.