Credit score for mortgage - new BEACON Mortgage Score
In effort to help mortgage lenders, FICO introduced BEACON Mortgage Score, an all new credit score specifically designed for mortgage industry. According to FICO, Equifax BEACON Mortgage Score, which is not to be confused with your traditional BEACON Score offers unprecedented predictive power to help home loan lenders make smarter mortgage decisions. We of course, heard that before, I mean the predictive power part. This new credit score for mortgage lenders was to be available in April to assist with every loan servicing decision including purchases, refinances and mortgage loan modifications.
The new score is based upon the existent BEACON credit risk score, already widely used in the mortgage industry. The main difference is that the credit score for home loans focuses specifically on mortgage risk performance, as it offers significantly greater power for assessing mortgage repayment risk. Hard to believe, but FICO claims it performed validation testing, comparing performances of BEACON Mortgage Score and general BEACON score when predicting mortgage repayment risk specifically. The result was, the new credit score for mortgage identified up to 25% more of the high-risk mortgages and home equity lines of credit that later became seriously delinquent - a crucial advantage in today housing crisis, as lenders can hopefully see potentially defaulting borrowers much better, thus mitigating the high cost of consumers moving to foreclosure and eventually saving some $1 billion in foreclosure costs while helping keep an estimated 115,000 more struggling homeowners in their homes.
BEACON Mortgage Score retains the regular 300 to 850 credit score scale range, minimum scoring criteria, and inquiry treatment. The main difference is the new scoring algorithm that digests few additional, mortgage-related repayment risk data points derived from Equifax consumer credit files, and includes 15 additional credit score reason codes to help lenders understand and explain the scores. It is nice for lenders to have more precise picture on a borrower credit score. For mortgage borrowers, it is likely business as usual - that is until the new risk data points and reason codes become known. See more at FICO.
Mon Jun 1, 2009 02:06PM | Copyright: www.bad-credit-advisor.com | More in Credit Score Help | Comments (0)
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