Financing for Homes and Small Businesses

Trended Credit Data Empowers Creditworthy Borrowers

Trended Credit Data was to roll out with Desktop Underwriter 10.0 during the weekend of June 25th.

That didn’t happen.

trended credit data

Fannie Mae delayed the new version of the automated underwriting system (AUS) until issues with testing can be sorted out.  Desktop Underwriter 10.0 uses trended credit data in its analysis.

What is Trended Credit Data

Trended credit data is expanded information on a borrower’s credit history at a trade line (credit line) level on several monthly factors, including: amount owed, minimum payment, and payment made.

Traditional credit data and FICO scoring look at whether obligations are paid as agreed, the balance relative to the high balance for revolving accounts and the minimum payment for each of the debts.

Currently, the traditional data has no way of determining whether you are paying the balance in full, only the minimum due or some payment between the two.  As Eric Rosenblatt, Fannie Mae’s VP for Credit Risk Analytics and Modeling suggests, trended credit data allows the incorporation of that analysis:

Giving weight to how borrowers pay off credit debt puts more power in their hands to control their credit evaluation.  Payment delinquencies are a significant factor in credit scores, and borrowers can do nothing but wait for the delinquencies to grow ever farther back in time.  But when trended data is considered, by paying credit card balances in full or in large part for a few months, borrowers can demonstrate that a late payment was not deeply reflective of their general debt repayment ability and behavior.

Using Trended Credit Data to Your Advantage

With Trended Credit Data you can alleviate the effect of past collection accounts or late payments by paying more of your revolving accounts in full each month.  It won’t be reflected in your score but Desktop Underwriter 10.0 will incorporate your new, recent history into its analysis and approval of your loan request.

By the same token, if you are a borrower with several low balance credit cards try to pay more than the minimum due each month.  You may find that you are penalized for only paying $25 when the outstanding balance is less than $100.

Mr. Rosenblatt goes on to note:

Regardless of their income or wealth, borrowers obligate themselves for debt repayment in various ways – many successfully, but some, through poor matching of income and consumption, disorganization, or for other reasons, less successfully.

Fannie Mae’s goal is to acknowledge that people can experience mishaps that are not fully indicative of their current situation.

If you know a friend or family member that can benefit from this information please share it with them today!

 

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