Fannie Mae is casting a wider net when it comes to scrutinizing credit details, according to The New York Times.
Fannie Mae, which is the government-run entity that finances mortgages across the United States, is now revamping its risk assessment technology in an effort to include more information on borrowers’ credit. The expanded information will tap into credit card payment history.
In an interview with NYT, Mindy Armstrong, who works as a Desktop Underwriter product manager in the single homes unit of Fannie, said that the new analytics will help determine the “risk of default on a loan.” The new credit scrutiny will move beyond balances and borrowing capacity and will now extend to see if borrowers paid more than the minimum due on cards each month. Such analysis may, said Armstrong, benefit those who pay more than the minimum or who pay in full each month.
The new credit reports are to be provided by Equifax and TransUnion, via a combined report, according to NYT. One bit of caution came from John Ulzheimer, a consumer credit expert quoted by NYT, who said that increased data analysis may, in fact, harm borrowers who have been “less diligent” about paying down balances. Thus far, according to NYT, Freddie Mac “has no plans” to adopt the new, expanded credit criteria.