In the last decade, mortgage lenders increasingly relied on credit scoring by the three biggest reporting agencies–Experian, Equifax, and Trans Union–to determine who they would loan to. This policy made underwriting cheaper and faster. And software like Fannie Mae’s Desktop Underwriter and Freddie Mac’s Loan Prospector pulled these scores from the bureaus, combined them with information about applicants’ income and assets, and spat out approvals or declinations in minutes. Underwriting no longer involved extensive research, such as verifying your check-writing history with your bank and your job performance with your boss.
Well, the recent rash of foreclosures has demonstrated to lenders that credit scoring isn’t the wonderful, money-saving, predictive process they thought it was. Continue reading ‘Lenders Looking at More than Just Your Credit Score’
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