Fair Isaac Corp., the creator of the widely used FICO credit score, released a new credit index this week that could help more borrowers qualify for a mortgage. The FICO Resilience Index, created to supplement the FICO score, is aimed at helping lenders assess a borrower’s ability to withstand an economic downturn, even if they have a low credit score.
The index culls personal financial information from before and after the Great Recession to measure a person’s chances of paying bills on time during economic volatility. Measuring on a scale of 1 to 99, lower scores indicate greater financial resilience in an economic downturn while higher scores indicate more sensitivity to economic shifts. “Our hope is that it will allow lenders to continue to be able to make prudent loans,” says Joanne Gaskin, vice president of scores and analytics at FICO. “Lenders are going to feel more comfortable continuing to approve borrowers rather than denying them.”
Read the story online here: New FICO Index May Help Expand Mortgage Lending