Richard's Real Estate Thoughts - Chattanooga TN Mortgage Lender: Trended credit evaluation may change your credit score

Trended credit evaluation may change your credit score

The credit scoring model is changing to incorporate an evaluation of 24 month account trends for credit card accounts. This is a significant change to the scoring model. FNMA has indicated they do not expect the percentages of approvals to change. It is possible that some individual borrowers will have their credit scores affected, and possibly even their approval determination.

Credit scoring has previously been something of a snap shot profile. Pay history has always been important, and that is not changing. A factor called credit utilization ratio has also had a significant impact on scores. Credit utilization is a measure of the available credit. If a card has a limit of $1000, then a $500 outstanding balance gives a 50% utilization ratio.

A high utilization ratio tends to lower credit scores. A low utilization ratio tends to boost credit scores. This has been an area where consumers could be counseled to improve their scores in advance of buying a home.

The change of scoring models to evaluate account 24 month trends may affect consumers who have new accounts, with little history, and consumers who have carried high balances and just recently have paid down charge card accounts. Consumers who pay more than the minimum or who pay their accounts in full monthly should expect higher scores than consumers who have typically paid the minimum due.

It will be a learning process for us all as we learn how trended credit evaluation affects each buyer’s credit score. These changes will be implemented on September 24.

If you have questions about credit and credit scoring and how it may affect your ability to purchase a home, please contact me.

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Richard Smith
NMLS# 184479 TN# 104002 Georgia Residential Mortgage Licensee, GA#28928 

Conventional, FHA, FHA 203k, HUD $100 down purchases, VA,

Rural Development (USDA), THDA and Jumbo Loans

Lending in Chattanooga, Tennessee and Georgia for over 20 years.

Fairway Independent Morgage Company

Cell phone: 423-280-0345 Email:

Visit my website to inquiry about a home loan.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Fairway Independent Mortgage Corporation.

Comment balloon 1 commentRichard Smith • September 16 2016 06:45AM


There is always so much to learn and be vigilant about...great info

Posted by Kristin Johnston - REALTOR®, Giving Back With Each Home Sold! (RE/MAX Realty Center ) about 1 year ago