Credit scoring companies like Fair Isaac Corp. and VantageScore have started exploring the use of non-traditional measurements such as rental payment and utility payment histories to help create a broader credit picture for potential home buyers who don’t have deep credit histories or whose credit has been dinged for reasons not entirely in their control. This week, NAR is joining two other real estate groups, the National Association of Hispanic Real Estate Professionals and the Asian Real Estate Association of America, to host a national symposium Wednesday, April 1, on whether it’s time for lenders and the secondary mortgage market to integrate these non-traditional measurements into the country’s broader mortgage finance system.
Access to credit has been a major concern since the mortgage downturn, when lenders started tightening credit requirements and otherwise financially responsible households faced hurdles securing financing for home purchases. Tight credit has been a particular problem for first-time home buyers who have solid rental payment histories but haven’t yet established a track record on mortgage payments.
In addition to adding rental payments and other non-traditional indicators to their measurement tools, credit scoring companies have also taken steps to isolate indicators that could give a false picture of household creditworthiness. One of these is paid medical collections, which can weigh heavily on a household’s credit score even if the household otherwise has a solid history of making monthly payments.
Look for coverage later this week of the Credit Access Symposium hosted by NAR and its industry partners. Speakers include Mark Zandi of Moody’s Analytics, Tricia McClung of the Consumer Financial Protection Bureau, Barrett Burns of VantageScore, Lori Goodman of the Urban Institute, and Vanessa Perry of George Washington University. Other participants include Jason Madiedo of the National Association of Hispanic Real Estate Professionals, John Wong of the Asian Real Estate Association of America, and NAR President Chris Polychron. Julian Castro, secretary of the U.S. Department of Housing and Urban Development, will give a closing address.