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It seems to me like only yesterday when a brand new method of determining a borrower’s creditworthiness was introduced. It was dubbed a “credit score”. It would revolutionize lending. No longer would underwriters need to sweat and labor reviewing the details of an applicant’s credit history and profile. Like Prego, it’s in there. All the necessary ingredients to determine a consumer’s credit profile. The credit score was born.
The better the credit score, the better the risk. Why analyze all the details? This new credit score already took all that information into consideration when determining the score. No more discrimination because of an underwriter’s bias toward how certain people use credit, ethnicity, race, color or creed. It was the ultimate way to determine an applicant’s creditworthiness for repayment for the loan. Simple and direct.
Well, I guess that didn’t work so well. So, now a new process has come along to once again revolutionize how credit is reviewed and applicants get approved. It’s called “credit trending” and it’s the latest in a more thorough review of an applicant’s credit profile to help us approve more consumers for more loans (Trending). Oh, happy days…credit review will never be the same.
Wait a minute, if I’m not mistaken that’s how credit was reviewed in the “old days”. An underwriter would take a look at a credit report, analyze the number of trade lines, when opened, how payments were made, a payment history, and the type of credit involved, then, determine an applicant’s creditworthiness.
Wow, the “new” data on the trending credit reports will now provide us the same information that was removed when we got the brand, new credit score. All that background info that wasn’t needed anymore. Alleluia.
Look, I’m all for doing what’s best for the consumer. If a more detailed credit analysis will help. I say go for it.
It just gets me when something gets announced that’s so obvious it should never have been ignored in the first place. Trending, or payment history, is important. It will provide an underwriter with background data to help approve or decline a loan.
That door swings both ways. So, be prepared. Some loans which have previously been approved because of the credit score may now be declined because of the credit tending data. Underwriter analysis of the trend information may make or break a deal.
Let the screaming (and the second guessing) begin.
