Beginning September 2016, Fannie Mae requires lenders to use trended credit data when underwriting single-family borrowers through Desktop Underwriter. This data will be provided by Equifax and TransUnion, and allows a smarter, more thorough analysis of the borrower's credit history. Currently, credit reports used in mortgage lending only indicate the outstanding balance and if a borrower has been on time or delinquent on existing credit accounts. With trended credit data, lenders will have access to the monthly payment amounts that a consumer has made on these accounts over time. Among other benefits, this will allow lenders to determine if the borrower tends to pay off revolving credit lines such as credit cards each month, or if the borrower tends to carry a balance from month-to-month while making minimum or other payments.
What does this mean for Borrowers?
Trended credit data could open up more
for those pay off revolving credit lines monthly or make more than the minimum payment. These creditworthy consumers may not have a huge amount of available credit, but they show responsible credit management over time.