How ‘Trended Data’ Can Affect Your Creditworthiness

In September 2016, Fannie Mae began processing “trended data” in order to gain a deeper understanding of consumer credit history. While this practice has been commonplace among credit card companies for some time, this marked the first time the technique was widely employed in the mortgage industry – and the trend is likely to spread.

Trended data provides a 24-month history of a consumer’s credit payments, with added variables such as whether a borrower pays the minimum payment or their full balance each month. Fannie Mae uses a program called Desktop Underwriter to access this information, which is widely believed to be a better predictor of whether a consumer is likely to default on a mortgage.

“Borrowers who pay off their credit card balance are 60% less likely to become delinquent than those who make a minimum payment each month. That is what our research has shown,” said Mindy Armstrong, production manager for Desktop Underwriter.

Standard credit reports show only the number of times a consumer has missed a payment in the last 12-24 months, often disqualifying those who may be considered on the verge of mortgage approval.

“It will go a long way in helping to determine who really should be getting mortgages — especially people who are close to the margin and too risky,” says credit expert John Ulzheimer.

Prospective home buyers who were recently narrowly denied for mortgages may find they have trended data on their side. Reapplying through Fannie Mae may yield more desirable mortgage loan results for these consumers.

Image via Flickr/nathanbaney