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What is Trended Data?

  • By Credit Diva of Dallas
  • 15 Nov, 2018
  • 0 Comments

There’s a new kid on the block in the business of mortgage credit approval, and it is now making its way into being used to calculate other forms of your credit score.

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A few years ago the three largest credit reporting agencies, Experian, Transunion, and Equifax worked together to create a shiny new credit assessment tool that worked better with their different databases and to compete with the FICO score algorithm.

This tool is called VantageScore, and one of its advantages is that it gives a broader, more thorough assessment of creditworthiness by using Trended Data.

Trended Data is the ability to look at the credit card payment history of an individual from the last 24 months. Mind you, the actual amount paid for the previous two years. This data is especially important to the mortgage industry.

Mortgage lenders feel safer lending to people who pay off their credit cards in full every month. Fannie Mae started using trending data in 2016 with the advent of their Desktop Underwriter 10.0 software. They use this data not only to determine whether to loan you money but also how much to charge you in fees. This government-created enterprise is in charge of some of the lending rules, so their practices spread throughout the industry.

Trended Data gives lenders a more comprehensive assessment of a buyer, rather than relying on the current snapshot view of the FICO score commonly used.

It also allows yous to have a higher degree of control over your credit score by paying more than the minimum payment on your cards every month.

Fannie Mae looks at multiple factors to determine whether to offer a mortgage:

  • Credit score
  • Overall credit report factors (credit utilization, payment history, types of credit, etc.)
  • Size of down payment
  • Whether the loan is to buy or refinance
  • Kind of dwelling (house, condo, duplex)
  • Loan-to-Value (LTV) ratio
  • Debt-to-income ratio
  • Trended Credit Data
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Proponents of trended credit data say some consumers will be able to buy houses who might not have been previously eligible. If credit utilization is at 40%, that’s higher than the 30% the industry likes. However, trended data will show if the customer’s credit utilization went up or down. If a customer had a 60% credit utilization and is now at 30%, they are trending down, paying off their debts. A customer that had the 30% and is using more credit might indicate trouble on the horizon and lender might proceed more cautiously.

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