Premier Lending Adopts FICO 10 T for Better Credit Risk Analysis

Mortgage lender Premier Lending Inc., based in North Carolina, has adopted the FICO Score 10 T, an updated credit-scoring model, to advance its innovation strategy and facilitate more homeownership.

The company aims to enhance its lending decision-making process with the new model, which incorporates trended credit data for greater accuracy.

FICO's 10 T model, released in 2020, promises to improve mortgage approval rates by up to 5% without increasing risk and potentially reduce default risk by up to 17%. This development comes as the Federal Housing Finance Agency plans to update credit models used by government-sponsored enterprises like Fannie Mae and Freddie Mac, shifting from classic versions to models like FICO 10 T and VantageScore 4.0.

However, the transition has faced delays due to stakeholder concerns and debates over pricing changes. Some lenders, including Primis Mortgage, Movement Mortgage, and CrossCountry Mortgage, have already moved to the FICO Score 10 T, and others are expected to follow as regulators push for a modernized credit system that leverages trended data.

Our Opinion:

Premier Lending Inc. adopting the FICO Score 10 T system is a relevant developmental shift in the alternative financing landscape. It offers more detailed and accurate risk assessment which can strengthen their credit portfolio. However, it also demands addressing concerns related to disadvantages for certain borrowers, operational challenges, and data privacy issues. This move potentially makes Premier Lending Inc. more competitive in the lending market and can stimulate more thought-provoking discussions on the implications of such measures in the alternative financing industry.

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Premier Lending Adopts FICO 10 T for Better Credit Risk Analysis