Anna Maria Andriotis

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3,396 appearances 52 recordings 1 series first heard Jul 2017 last heard Dec 2022

Anna Maria Andriotis’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Lenders Rely Less on FICO Score to Determine Creditworthiness · 2 Aug 2021 podcast

What has been playing out over the past year has been an effort by some of the larger banks, including JP Morgan, Wells Fargo, U.S.

Bank, they've essentially come to an agreement that they are going to begin exchanging

their own data on consumers, specifically deposit account information, to help each other to essentially make underwriting decisions when somebody comes and applies for a credit card at any one of these banks.

If they don't have a credit score, they have a very low credit score, being able to look at bank accounts would basically help the banks to make a decision

regarding whether or not to approve those people.

So right now, a bank can look to see if a credit card applicant has a bank account with them and make a decision about whether or not to approve that applicant based on how they're managing the bank account with that same financial institution.

But a big blind spot is when you have somebody who doesn't have a credit score

And they don't have a bank account with the bank that they're applying for a loan or other financing product with them.

At that point, they're almost certainly going to get rejected.

FICO has made several overtures, several attempts to become part of this discussion and has also offered a specialty score that it created a few years ago that factors in the way people manage their bank accounts.

But the banks, at least the big lenders involved in this effort so far, have not yet taken up FICO on this offer.

in its efforts to become part of the discussion and to offer its niche score for a free trial to the lenders participating in this program.

Basically, so far, the big lenders have told the OCC they're not interested

and have not yet taken up FICO on the offer.

So you see this sort of pretty wide scale effort involving a major regulator and big banks and other entities where they're basically trying to see if there's a way to underwrite people without placing as much of an emphasis on credit scores.

Starting from the mid-1990s, Fannie Mae and Freddie Mac required that lenders that

wanted to sell mortgages that they originate to Fannie or Freddie.

If they use credit scores to make decisions about whether or not to approve people for those mortgages, the scores they would use would have to be FICO scores if they wanted to then sell the mortgages to Fannie or Freddie.

There's been a years-long process, this has been going on for quite a while, which basically involves Fannie and Freddie reviewing other scores to see if they will essentially agree to allow for other scores beyond FICO to be used.

So one recent development on this front, earlier this year, Fannie Mae and Freddie Mac, according to my sources, notified a company called Vantage Score Solutions.

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