Fico, formerly known as Fair Isaac, unveiled a new credit score today designed specifically for mortgage lenders and servicers.
The so-called “BEACON® Mortgage Score,” created with credit bureau Equifax, aims to provide better decisioning results when addressing the risk of both current homeowners and potential ones.
“Everyone in the mortgage industry is working hard to manage risk more effectively, which will help address the rising foreclosure rate while allowing servicers to keep their doors open to qualified new borrowers,” said Dann Adams, president of US Consumer Information Solutions for Equifax, in a release.
“The BEACON Mortgage Score is an innovative solution with unprecedented visibility that will provide greater predictive strength at a time when the industry needs it most.”
The mortgage credit score retains the same 300-850 scoring range, minimum scoring criteria, and inquiry treatment as the previous score, but utilizes new, undisclosed data variables to predict mortgage repayment risk.
The model includes 15 additional score reason codes to help banks and mortgage lenders more effectively make sense of the scoring so better choices are made when it comes to providing new financing and loan modifications.
The test suggests that use of the mortgage score could save the industry $1 billion in foreclosure costs and help keep an estimated 115,000 more at-risk borrowers in their homes.
Personally, I don’t think the old credit score was inherently bad, just over relied upon, which is why some critics felt it played a part in the ongoing mortgage crisis.