Going Beyond the Credit Score
Fair Isaac Corp. and the credit bureaus have rolled out numerous products to provide lenders and investors with alternatives to the FICO score in assessing borrowers' default risk.
The Credit Capacity Index from Fair Isaac gauges how well borrowers manage incremental debt, while Trend Data from TransUnion gauges the performance of loan portfolios when specific variables and regional economic indicators are factored in.
Steps also are being taken to improve the tools available to mortgage lenders to assess default risk, with industry experts pointing out that FICO scores were inadequate on their own because credit bureaus receive mortgage data without knowing the type of loan and are not given access to copious amounts of data on the performance of loans held in lenders' portfolios.
National Bank of Kansas, for instance, is going beyond the FICO score, also using a fraud score, risk profile, appraisal review and an expanded team of risk managers and underwriters to reduce default risk.
Source: American Banker, Kate Berry (06/18/08)
The Credit Capacity Index from Fair Isaac gauges how well borrowers manage incremental debt, while Trend Data from TransUnion gauges the performance of loan portfolios when specific variables and regional economic indicators are factored in.
Steps also are being taken to improve the tools available to mortgage lenders to assess default risk, with industry experts pointing out that FICO scores were inadequate on their own because credit bureaus receive mortgage data without knowing the type of loan and are not given access to copious amounts of data on the performance of loans held in lenders' portfolios.
National Bank of Kansas, for instance, is going beyond the FICO score, also using a fraud score, risk profile, appraisal review and an expanded team of risk managers and underwriters to reduce default risk.
Source: American Banker, Kate Berry (06/18/08)
Labels: Finance
posted by Steve Hardy at
1:57 PM
