With the addition of the FICO® Mortgage Score Powered by CoreLogic®, the CoreScore credit report becomes a powerful solution at the point of origination: when your opportunity to increase revenue and decrease risk is greatest.
The score extracts and quantifies critical risk insights from the CoreScore credit report’s traditional and supplemental consumer credit data to generate a more comprehensive and predictive mortgage credit score. In fact, a recent validation indicates the new scoring model is 7.5% more predictive than the general-purpose FICO scores currently in use. For many lenders, this can translate into thousands of new mortgages and the avoidance of millions of dollars in bad loan costs.
The Mortgage Industry’s First Composite Mortgage Score
The new FICO score for CoreScore provides you with the unique ability to request the industry’s first “composite” mortgage score. This composite mortgage score incorporates credit data from multiple Credit Reporting Agencies (CRAs), including CoreLogic Credco, into one comprehensive mortgage consumer risk score. This allows you to capture a consumer’s risk in one easy-to-use score. Alternatively, the CoreScore Solution also allows you to generate separate FICO Mortgage scores based on data from each traditional available CRA plus CoreLogic Credco data.
A Seamless Path from Today to Tomorrow
The score is designed to augment, not replace, the credit risk scores and policies you use today. This means that you can continue to reap the benefit from your existing standard and customized rules and scores, while adding additional insight from CoreScore with minimal IT investment. Furthermore, the new scoring model maintains consistency with features of the FICO scores in use by mortgage lenders today, including such features as the same 300-850 scoring range, calibration, and reason codes which have been harmonized across the CRAs.
Providing this broad level of continuity with existing FICO scores makes the score easier to integrate into your existing underwriting policies and procedures, and easier for consumers to understand.
Quantifying the Score’s Value
While there are numerous variables that result in different outcomes for different lenders, some basic assumptions can help give you an idea of what the score can do for your business.
For example, a lender specializing in conforming loans ($417K or less) and using a cutoff score of 700 on an industry-standard FICO risk score could incorporate the new score into their existing underwriting strategy and increase their acceptance rate by over 1%, with a slight reduction in the overall bad rate.
Assuming the revenue from a good loan equals $2,000 and the loss from a bad loan is $50,000*, the new scoring model would generate a net financial benefit of $38.72 per application. On a pool of 150,000 applications, this equates to a financial impact of approximately $5.8 million, attributed to profitably 1,500 new applications and mitigating potential credit losses of $2.7 million.
CoreScore can provide opportunities for new revenue and cost savings:
*Loss metric is from the Mortgage Bankers Association Lender’s Cost of Foreclosure Policy Paper and represents the cost of taking a property to foreclosure excluding the gain/loss on disposition. Loan profit figures are an assumption based on average figures provided by multiple lenders and additional sources. Results will vary based on location, population, loan pool and other external factors.
Support and Availability
The new scoring model is available only from CoreLogic as part of the CoreScore Solution. Along with the CoreScore credit report, the score as is delivered in standard MISMO/XML format via major loan origination platforms. The full complement of consumer disclosure functionality, including Risk-Based Pricing Notifications, is also available.