Movement Mortgage, an industry-leading lender, has announced that it will be an early adopter of FICO Score 10 T, an updated credit scoring model designed to improve mortgage approval rates. The company will use FICO 10 T to analyze its non-conforming loans in conjunction with the classic FICO Scores. This move is expected to help the mortgage industry understand the benefits of this predictive credit score.
FICO Score 10 T was released by FICO in 2020 and incorporates trended credit bureau data, allowing lenders to make more precise lending decisions. The inclusion of trended data in the credit scoring model can expand mortgage approval rates by up to 5% without adding incremental risk, according to FICO.
Movement Mortgage’s adoption of FICO Score 10 T is significant as it showcases the comparisons between classic FICO Scores and the new scoring model. Jim Wehmann, EVP for scores at FICO, believes that this partnership will optimize mortgage originations. Jason Stenger, COO at Movement Mortgage, expressed excitement about implementing FICO Score 10 T for non-conforming loans and helping more consumers qualify for mortgages.
The Federal Housing Finance Agency (FHFA) announced in late 2022 that it plans to replace the Classic FICO credit model, which has been relied upon by Fannie Mae and Freddie Mac for nearly two decades. The FICO 10 T and VantageScore 4.0, a competing model that also incorporates trended credit bureau data, will replace the Classic FICO model.
Originally, FHFA had set a timeline for implementing the updated credit models, but following concerns expressed by stakeholders and members of Congress, the agency decided to delay the transition to a bi-merge system. FHFA will instead offer additional opportunities for public engagement as it considers the transition to updated credit score models and credit report requirements for loans acquired by government-sponsored enterprises (GSEs).
In conclusion, Movement Mortgage’s decision to become an early adopter of FICO Score 10 T is a significant step towards improving mortgage approval rates. The incorporation of trended credit bureau data in the scoring model has the potential to benefit both lenders and consumers. With the FHFA’s plan to replace the Classic FICO model, the mortgage industry is poised for significant changes in the coming years.