FICO is rolling out a credit score simulator for its mortgage banking customers at a time when its near-monopoly use in the industry is being chipped away at.
More controversially, the company is rumored to be hiking its prices for generating a score yet again. This is following prior boosts, the first in 2022, when it introduced
FICO has no comment at this time regarding
However, Greg Sher, managing director of NFM Lending, posted on LinkedIn
The new offering, FICO Score Mortgage Simulator, looks at the impact to the consumer's credit score generated by its algorithms and various simulated changes to their credit report data, such as reducing credit card balances or deleting a collection account. With that valuable insight, mortgage professionals, such as brokers and lenders, can help potential borrowers gauge how the changes could affect their FICO Scores and show them how different credit decisions could open up more loan options and favorable interest rates.
It is the only simulator that uses an actual FICO Score as well as the company's algorithms, said Julie May, vice president and general manager of B2B scores, in an emailed response to questions.
"The tool was developed by FICO analytic scientists with unmatched knowledge of how FICO Scores work," May said. "It also simulates the most accurate potential FICO Score impacts resulting from simulated changes in credit report data."
The simulator uses a credit report that was already pulled as part of the mortgage process, so it does not otherwise impact the consumer's score.
The simulator supports online credit bureau reports that have a Classic FICO Score from Experian, Equifax or TransUnion. Users can decide if they want to use the tool on a single bureau report, or on two or even all three, May said.
That means it uses FICO 2 for Experian data, FICO 4 for TransUnion and FICO 5 for Equifax.
"Use of FICO Score 10T in the solution will be coming in a future date," which is to be determined, May said.
Xactus, a credit reporting agency, already is a user of this new FICO offering.
"The FICO Score Mortgage Simulator is an innovative new tool, and we are thrilled to be at the forefront of bringing it to the mortgage market," said Shelley Leonard, Xactus' president, in the FICO press release. "This tool brings a unique opportunity to allow both lenders and consumers to not only have a deeper understanding of FICO Score dynamics but provide a better experience and return for everyone."
FICO is not the first company to come out with a scenario simulator. CreditXpert demonstrated
FICO's status as the sole provider of mortgage credit scores for use by the conforming market is changing. At the
Adoption of VantageScore 4.0 has been underway in other portions of the industry. The Federal Home Loan Bank of New York just announced it will accept mortgages underwritten using that model as collateral for advances.
Other FHLBanks, notably Chicago and San Francisco, previously announced they are accepting collateral that uses VantageScore 4.0
The Department of Veterans Affairs, which does not have a specific credit score requirement, accepts both
In August, a pair of congressmen from New York City, Ritchie Torres and Gregory Meeks,
"The decision by the Federal Home Loan Bank of New York to recognize VantageScore 4.0 lays a critical foundation for broad base wealth creation in America," Torres said in a press release. "I have constituents who have reliably paid their rent in full and on time for decades, and yet none of their rental history is taken into account by conventional credit scoring."
