Wednesday, 14 March 2018 14:03

How Mortgage Credit is About to Change

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In what seems a status quo that has been in place for eons, the way credit is measured in the mortgage market appears poised to change. For many years, Fair Isaac Corp’s FICO score has been by far the dominant credit score used when determining mortgage issuance. Now Congress is trying to shake things up with a bank deregulation bill that would require Fannie Mae and Freddie Mac to consider credit scores beyond FICO. If the move happens, it is expected that more mortgages would be approved.

FINSUM: This would be a huge shakeup with big implications for the market. If more mortgages get approved, it seems like credit-worthiness would fall in aggregate, with a commensurate rise in rates.

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