NPR: FICO to Get Competition
LISTEN TO THE NPR STORY HERE.
A new rule from the Federal Housing Finance Agency – which oversees Fannie Mae and Freddie Mac – is requiring those two mortgage financing companies to consider alternatives to FICO when figuring out if borrowers qualify for a loan and at what rate.
The idea being that this may help some borrowers to qualify who might not otherwise.
In particular, it could mean more use of a FICO competitor – called VantageScore – which uses slightly different criteria and tries to assess creditworthiness of people who may have more limited credit histories.
Because Fannie and Freddie back nearly half of all mortgages in the U.S., this could have a big impact on the mortgage market.