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Obtaining home loans with alternate credit info

Using alternate credit data for home loans

Posted on 10/28/12 12:32:00 PM

Americans who are looking to purchase a home might benefit from using alternate credit data. CoreLogic, one of the leading providers of information, analytics and business services, recently announced the results of a report by CEB TowerGroup analysts that showed using alternative data, such as unsecured credit, payday lending and property history can help lenders adjust their credit risk evaluation policies to better assess applicants.

"Traditional credit data and analytics continue to be relevant, but are not sufficient to satisfy the consumer credit reformation of today," said the CEB TowerGroup's senior research director,Craig Focardi. "As a result of the changes in consumer behavior, lenders cannot revert back to their prior mortgage underwriting policies. Too much damage has already been done to the market, consumers, shareholders and investors."

Findings of the report also revealed that alternative credit information can support loan applicants with newly established credit files with good credit, those who have minimal information in their traditional credit files but good alternative credit payment histories and long-time renters with no serious payment problems.

Another finding showed that more complete loan applicants, property and related information will bring better transparency and efficiency to the mortgage lending markets, in addition to helping reduce risks.

"This CEB TowerGroup report shows that enhancing the process of determining risk with new alternative data and analytics would allow lenders to approve loan applications that might otherwise be denied, or deny problem loans that might otherwise be approved," said Tim Grace, senior vice president of Product Management at CoreLogic. "Both outcomes would help consumers and the market itself. In our own analysis, approximately 70 percent of a sample population saw their credit score improve with the FICO Mortgage Score Powered by CoreLogic."

Grace added that a separate analysis of 300,000 mortgage applications discovered that than 3,100 more applicants would receive a qualifying credit score of 700.

With the housing market improving gradually over the past few months, more Americans might look into secure ways to boost their credit so they can be approved for recreational loans that will help them pay for the home of their choice. Home prices are continuing to increase across the country, which might encourage many to look into purchasing a home sooner in order to take advantage of the lower prices.