72 Percent of Mortgage Applicants See Higher Credit Scores When Brokers Use Alternative Credit Scoring Models; Results Could Boost Ailing Housing Market

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Recent data released by Advantage Credit International shows that credit bureau alternative scoring models return a higher credit score for potential home buyers 72 percent of the time, which in many cases can be the difference in whether or not a borrower qualifies for a mortgage. While most mortgage brokers and consumers are only aware of the default credit score from each bureau, a bureau will often have several models for scoring mortgage reports, and all are just as acceptable to lenders and Fannie Mae's DO/DU applications.

Advantage Credit's recent launch of ScoreChoice™, a new mortgage credit report feature that allows brokers to order six bureau scores instead of the traditional three, has been shown to increase the opportunity for higher credit report scores for borrowers. Advantage Credit, a company that provides mortgage credit reports and other value added services to tens of thousands of mortgage brokers throughout the United States, developed the ScoreChoice™ feature to help their mortgage broker customers qualify more borrowers for loans in the currently tight credit market. ScoreChoice™ works by automatically pulling three alternative scoring models from TransUnion and Experian and including them on Advantage Credit's trimerge mortgage credit report.

"By offering the broker the ability to access all six available bureau scoring models at the time of the trimerge order, we found we helped get a higher score 72% of the time," says Kelly Gontarski, VP of Sales and Marketing for Advantage Credit. The study reflected the number of times the alternative scoring models from TransUnion, Empirica95 and Empirica98, were higher than TransUnion's default scoring model, Empirica04. "ScoreChoice™ allows us to pull and display all the scores generated by all the models offered by the bureaus, giving the broker and the borrower twice the opportunity to get the score they need to close the loan."

Although credit bureaus scores are derived from the Fair Isaac Risk Model, the three repositories further calculate a borrower's credit score using their own proprietary computation models. Each model has a trademarked name and they differ in what they mean to predict, the statistical methods used to determine a creditworthiness score, what data is used and how they are weighted. A bureau will often have two or three models for scoring mortgage reports. Credit reporting agencies typically default to one version from the repository although the other models are just as acceptable to lenders and Fannie Mae DO/DU. A trimerge mortgage credit report with ScoreChoice™ includes two alternative scoring models from TransUnion (Empirica 95 and 98) and one additional model from Experian (Isaac 1), plus the three bureaus' default models.

"Although Advantage Credit has always offered brokers the ability to re-pull a borrowers credit using a specific alternative bureau model after the initial pull, it proved time consuming for the broker and could increase the number of inquiries on the borrowers credit file", says Chadd Ott, Business Development Manager. "ScoreChoice™ solves those issues by pulling all of the available alternative credit scoring models at the time of the original credit pull. By accessing all of the scores with one pull it saves money, lessens inquiries, and brokers know up front what they have to work with."

ScoreChoice™ results are generating excitement among Advantage Credit's customers, especially considering the challenging economic environment. "I receive the best score out there possible for my client, "says Lisa Melton-Peyton, a broker with Open Mortgage LLC. "Because of the new program, I am in the middle of closing two deals that could have gone south. This has been a great selling tool. It's an awesome product giving the best scoring the first time around which means another potential closed loan."

For over 18 years Advantage Credit has consolidated credit reporting data from the three credit bureaus: Equifax, Experian and TransUnion, delivering it to mortgage brokers on demand via the web. In 2008 the company weathered one of the industry's hardest crashes to date, recognizing that brokers have a tough road ahead of them.

"ScoreChoice™ is another tool we can now offer our brokers to help them navigate one of the most difficult economic times imaginable. We're also proud to be helping responsible borrowers achieve home ownership in a time when lenders are scrutinizing every loan. It's a win-win for everyone," says Gontarski.

About Advantage Credit
Founded in 1991, Advantage Credit is a 5-time Inc. 500 "Hall of Fame" winner, providing credit reports and related services to more than 20,000 mortgage brokers and several of the nation's largest mortgage companies through Advantage Online. For more information, contact Kelly Gontarski at 800.600.2510 x2297, or visit http://www.advantagecredit.com/products/alternative-credit-scoring-models.aspx


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