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

Its credit scores are called Vantage Scores.

that basically their newest score had passed Fannie and Freddie's credit score assessments, essentially meaning that the score met a minimum accuracy threshold.

So now the process continues, the review at Fannie and Freddie continues to basically decide ultimately, for there to ultimately be a decision about whether or not

Other scores beyond FICO will be able to be used in the underwriting process for a large chunk of mortgages being originated in the U.S.

So lenders' efforts to rely less on FICO scores accelerated during the pandemic.

The main reason is because the credit scores do not reflect deferment and forbearance programs, which millions of consumer loan accounts have been placed in, in particular soon after the pandemic began.

So the fact that credit scores don't reflect deferment and forbearance programs essentially made it harder for lenders to evaluate borrowers.

So basically, this was really the result of federal law that was passed last year, soon after the pandemic really kicked in here in the U.S., which basically said that if lenders placed consumers in deferment or forbearance programs, essentially not penalizing them with late fees and other things,

for not making their loan payments.

Then they also could not report them as being late on their credit reports.

Well, so FICO scores are based off of the information in people's credit reports.

So from the moment that people who weren't making their payments because they were in these relief programs were not being reported as being late,

That also was not being reflected in FICO scores.

And to be fair, third-party scores in general, not just FICO scores that are based off of people's credit reports.

The last thing that a lender wants to do is to approve somebody for a credit card or another type of loan when they're not paying or are unable to pay

an existing lender of theirs, and that information isn't reflected in their score and their credit reports.

So that really increased the need among many banks to look at other data, to rely more heavily on other data than they were previously in order to make their loan underwriting decisions.

FICO scores remain a good gauge for people who want to know where they stand from a credit standpoint, if they have a good credit score, if they have a bad credit score, and there are likely chances of whether or not they're going to get approved.

But having a very good read on that as a consumer is becoming harder for the following reasons.

Big banks, in particular with some of my sources who I spoke with for this story, are increasingly making decisions that aren't necessarily what the FICO score would guide them to do.

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