New fico credit score for Mortgage Lenders Revealed

The BEACON Mortgage Score from Equifax now offers mortgage lenders the ability to make better mortgage decisions.

On March 11, 2009 - FICO and Equifax introduced BEACON® Mortgage Score, a new FICO® industry score specifically designed to help mortgage lenders make the best possible risk decisions when addressing both current homeowners and those planning to own. Equifax is going to make the new score available in April to mortgage lenders and servicers for use in their loan servicing decisions including mortgage loan modifications.

The new score builds upon the predictive power of today's BEACON® credit risk score which is widely used in the mortgage industry. By focusing specifically on mortgage risk performance, FICO scientists have developed a version of the BEACON score with significantly greater power for assessing mortgage repayment risk.

In early validation testing, the performance of BEACON Mortgage Score was compared to that of the general risk BEACON score when predicting mortgage repayment risk specifically. The new score identified up to 25 percent more of the high-risk mortgages and home equity lines-of-credit that later became seriously delinquent. In light of today's housing crisis, this new score can aid servicers in earlier identification of borrowers at risk, mitigating the high cost of consumers moving to foreclosure.

In business terms, these early results suggest that the use of BEACON Mortgage Score by the industry potentially can save it $1 billion in foreclosure costs and help keep an estimated 115,000 more struggling homeowners in their homes.

"One of the goals of our alliance with Equifax is to bring both companies' assets and expertise to bear on the uncertainty facing lenders, borrowers and investors," said Lisa Nelson, vice president of Global Scoring Solutions for FICO. "This new score is one of the first fruits of that alliance, and it couldn't be more timely or valuable for mortgage lenders, loan servicers and the securitization industry."

"Everyone in the mortgage industry is working hard to manage risk more effectively, which will help address the rising foreclosure rate while allowing servicers to keep their doors open to qualified new borrowers," said Dann Adams, president of US Consumer Information Solutions for Equifax. "The BEACON Mortgage Score is an innovative solution with unprecedented visibility that will provide greater predictive strength at a time when the industry needs it most."

To assist clients, BEACON® Mortgage Score retains the same 300-850® scoring range, minimum scoring criteria, and inquiry treatment as previous versions of the BEACON® score. However, to achieve its significant increase in predictive strength, FICO's new scoring model assesses several additional data variables derived from Equifax consumer credit files, selected specifically to predict mortgage repayment risk. As a result, the model includes 15 additional score reason codes that help lenders understand and explain the scores.

Press Release From Equifax