Credit scores and credit trended data

[AndySoCal]

Here are couple of links for your consideration 

https://www.fhfa.gov/policy/credit-scores 

https://www.rocketmortgage.com/learn/fannie-mae-credit-score-update 

[ShanetheMortgageMan]

FICO's own Julia May also blogged about this last month at https://www.fico.com/blogs/where-things-stand-fico-score-10t-conforming-mortgage-market.  

The transition is coming, currently estimated to be by the end of this year, though timelines in the mortgage industry have a habit of slipping.

[Thomas_Thumb]

Slipped, that's an understatement! This transition was previously targeted for completion by end of 2025.

[Robin063Collins]

Hello!

Credit scores are a snapshot of your creditworthiness, while credit trended data shows your borrowing and repayment habits over time. Together they give lenders a fuller picture: the score indicates risk at a moment, and trended data reveals whether you consistently pay in full, carry balances, or reduce debt gradually—helping distinguish between people with similar scores but very different financial behaviors. 

[Thomas_Thumb]

No, trended data does not determine if you PIF or if you carry a balance. Why? Monthly payments and minimum payments are not required to be reported by credit card issuers. If payment info is not provided, spend level and PIF behavior are indeterminant.

Mandated reporting is limited to monthly balance (typically statement balance), credit limit and whether the account is in good standing.  Many issuer choose to voluntarily report payment information but not all do.

Credit issuing institutions were able to pull and trend whatever info is in CRA reports long before VS4 or F10T existed. 

VS4 was introduced in late 2017. It promoted trending as an epiphany for credit risk assessment. It ended up primarily being a marketing tool to thrust VantageScore into the mainstream. It pushed Fico to follow suit with 10T in 2020.

Unfortunately, payment reporting for all accounts is not mandated. So PIF transactor behavior is still not factored into scoring. This means a score penalty may still be assessed for PIF transactors who allow balances to report naturally but pay in full by the due date.

For example, a PIF transactor may charge $3000 per month on a CC with a $10k balance on a regular basis.

Case 1 - balance reports naturally on statement abd is PIF before due date. Card UT is 30%. Score is penalized.

Case 2 - balance is micromanaged and $2800 is paid before statement close date. Balance reports at $200. Card UT is 2%. No score penalty.

In both situations the card owner has the same CL, charges the same amount each month and always PIF monthly charges. There is no difference in risk with these 2 payment styles. 

Credit scoring algorithms based on trended data could correct the score inequality but, they don't. Why?

Without mandated payment data, PIF transactor behavior can not be validated in all cases.

[AndySoCal]

Here are a couple links about the Vantage 4.0 score and who is accepting it.

This link provides more information on the  vantage 4.0 score plus who is accepting it.

https://www.realtor.com/advice/finance/qualify-mortgage-vantagescore/ 

VA administration 

https://finance.yahoo.com/news/vantagescore-4-0-allowed-fannie-162400322.html?guccounter=1&guce_refe... 

[TrapLine]

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@AndySoCal wrote:

Here are a couple links about the Vantage 4.0 score and who is accepting it.

This link provides more information on the  vantage 4.0 score plus who is accepting it.

https://www.realtor.com/advice/finance/qualify-mortgage-vantagescore/ 

VA administration 

https://finance.yahoo.com/news/vantagescore-4-0-allowed-fannie-162400322.html?guccounter=1&guce_refe... 

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Offering some thinking here ... we make it easier for people to make their biggest investment of their life and after they move in find they cannot pay for maintenance and capital improvement upkeeps required of the residence.

Saying this, you have your mortgage, your vehicle payment, your utilities, health insurance, food, child expenses and so on to pay. How are you going to really make it if you were a thin financial approval to start?

Is it really fair to further the American Dream and then leave the citizens holding the bag? Or, is this about big money making more money off the backs of those who can least afford it? Posing the question.

[AndySoCal]

@TrapLine @Yes the Vantage scores helps certain consumers with thin and other profiles. FICO is known to like accounts with long credit histories, low credit utilization etc. FICO is the only scoring model that waits for six months before the account is scorable. 

All that said the lender knows the pros and cons of each score model.  The lender is going to use the same underwriting methodology no matter what the score is. The score gives a little guidance and help but the dollar and cents numbers will rule the day.

[FicoMike0]

Ditto @Thomas_Thumb 

This trended data talk sounds like it is a new discovery. In fact, both fico and vs scores have always used trended data, that data being payment history. The only new thing is also looking at utilization history as well. I haven't seen my 10t or vs4 scores, but I fully expect it's all a lot of hype.

[AndySoCal]

@Thomas_Thumb  @TrapLine 

I have the one pay walmart credit card.  Currently my scores for FICO 10T  scores are 15 To 20 than the  Vantage  4.0 score. I was looking on the One Pay and found more information about the Vantage score.

Score ranges is taken from the one pay app

300-600 may be considered  "Below Average"

601-660 may be considered  "Average"

661-720 may be considered  "Good"

721+ may be considered " Excellent"

My current Vantage 4.0 score 807. I have said this before but I will repeat it once more.  All  a score is a three digit number based on the credit profile at the time the score was requested. All the score models use different methodologies to generate the score. Both the FICO scores and the Vantage 4.0 score are predictive scores. These score models are looking for traits or characteristics if you please on how well a consumer will be able to repay the loan. All a consumer can do is make sure the credit data that is used to generate the score is accurate. If the credit data is accurate the score is whatever it is. The underwriter is still going to do all the steps  necessary to complete the loan application.