FRMs reach new record lows
One of the government agencies tasked with regulating the mortgage industry recently found that the credit scores issued directly to consumers and scores used by mortgage lenders can be vastly different.
According to the Consumer Financial Protection Bureau, one in five borrowers receive different scores than those seen by a creditor. The agency fears this could result in borrowers receiving mortgages that are not cohesive with their actual score.
"This study highlights the complexities consumers face in the credit scoring market," said CFPB director Richard Cordray. "When consumers buy a credit score, they should be aware that a lender may be using a very different score in making a credit decision."
It was noted that there is notable disparity between different demographics. Specifically, younger borrowers and those in lower income brackets tend to experience less variation compared to older households living in high-income areas.
To curb the issue, the CFPB encourages borrowers to request copies of their credit report from a number of different sources. With this information they may be able to get a better gauge of the score lenders are using to consider their eligibility for a mortgage.
At the same time, it highlights the lack of consumer credit understanding. Mortgage professionals should also remind loan applicants that credit scores can vary a great deal, so the score they find online won't always match the score lenders show them.