Trended Data and Rescoring

As most know Trended Data will start coming into play at the end of September. Trended Data is a new way that Fannie Mae will start analyzing credit reports to see if a borrower pays his revolving debt off every month or just makes the minimum payments every month. While the Trended Data will show on all accounts, for the time being, the only accounts that Fannie Mae will be looking at are the revolving accounts. Trended Data is also only being utilized by Trans Union and Equifax for now, though Experian should follow suit some time in 2017.

A question we are being asked is whether or not this will affect the Rescore Express process. This being the process of expediting changes at the bureau level in a matter of days with the appropriate documentation, instead of the borrower going through a dispute process that could take 30-45 days or waiting for an account to report on its’ own. The answer to the question is no, it will not affect a Rescore Express.

Trended Data will not be factored into the scores, at least not at the onset. And while there is talk of it possibly being factored in down the road that will most likely be a long while.

A loan officer could always look at the Trended Data, analyze the payment history and see that possibly based on that history the scores could improve 30-90 or more days down the road based on balances possibly being lower at that time. However a Rescore is normally ordered because the mortgage company needs to see a change quickly. Trended Data also does not factor in the possibility of late payments being removed or collections being deleted. It is only showing the payment history on a given account.

What Fannie Mae is looking for with Trended Data is whether a person is a “revolver” or a “transactor”. A revolver is someone who only makes the minimum payments every month and carries balances. The Transactor is someone who pays their revolving balances off every month. The sort of black box here is how Fannie will utilize this as far as an acceptance of a loan. Will a borrower with a 680 credit score who is a Transactor get an approval before a Revolver with a 740 score because the Transactor appears to be a better risk? Is it likely that a revolver get a refer? This all remains to be seen. It will probably vary from borrower to borrower depending on what the rest of their credit looks like.

There will definitely be borrowers who will benefit from Trended Data and there will be those that won’t. At any rate, it will not affect the Rescore process because none of it is factored into the scores. The rescore process is an expedited process of making changes on a credit report quickly and not over a period of time.

It will be very interesting come the end of September to see how it all plays out. This way of looking at a credit report has never been done before. It might be wise for borrowers to start thinking about working on a way to pay off at least the majority of their revolving debt every month. Going forward this may open up more chances of approval for a mortgage.

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