New Credit Models Could Help, Someday

October 9, 2014

The Fair Isaac Corporation recently introduced a new scoring model. The model could help to expand credit to first-time and minority groups. But there is a problem: Fannie Mae and Freddie Mac, who support the majority of the mortgage market, don’t use the new model. …

The innovations in FICO 9 are not new though. VantageScore 3.0, the year-old product from FICO’s main competitor VantageScore, had these same methodologies. What’s more, these newer models incorporate utility and rental payments, information that helps lenders to evaluate younger persons and minorities who might not have a history of credit use (e.g. no car, credit card, or mortgage payments).

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