The New York Times reports that when evaluating home loan applications, they will soon begin to look further back into consumer credit histories. As the article describes, “beginning mid-2016, Fannie Mae will require lenders to use what is known as ‘trended credit data’ when submitting loan applications through the agency’s proprietary automated underwriting system.” So what does this mean for potential borrowers?
Well, as the Times describes, the trended data “will provide more of a credit chronology. It will go back 30 months, showing whether payments were made on time, and more important, whether borrowers tend to carry balances from month to month, pay more than the minimum or pay off balances in full.”
While this implementation could have a potentially positive impact, allowing for “smarter mortgage lending” and a clearer consumer history, it is also important to note that “it won’t work to all borrowers’ benefit” because it can potentially reveal negative details from further back in one’s credit history.