North Carolina-based mortgage lender Premier Lending Inc. has adopted the FICO Score 10 T credit-scoring model for its nonconforming loan originations and whole loan acquisitions.
Premier Lending is adopting FICO’s updated credit-scoring model “to continue to drive the company’s innovation strategy forward and help make more homeownership dreams a reality,” the company stated in a release.
“By integrating FICO Score 10 T into our arsenal, we’re elevating our credit decision-making for our products,” Fadi Faraj, CEO of Premier Lending, said in a statement.
FICO originally released 10 T in 2020, saying that the new model allowed lenders to have greater precision in making lending decisions through the incorporation of trended credit bureau data. The word “trended” is the source of the “T” in the 10 T name.
The 10 T model can expand mortgage approval rates by up to 5% relative to classic versions without adding incremental risk, according to FICO. The company also claims its 10 T model reduces default risk and losses by up to 17% by allowing lenders to project cash flows more accurately.
Government-sponsored enterprises Fannie Mae and Freddie Mac have relied on the classic credit models for nearly 20 years.
But the Federal Housing Finance Agency (FHFA) announced in late 2022 that it would replace the classic FICO credit model with FICO 10 T and VantageScore 4.0, a competing model that incorporates trended credit bureau data.
The original implementation timeline included a move from a tri-merge system to a bi-merge system in the first quarter of 2024. But concerns expressed by stakeholders and members of the U.S. Congress with FICO’s pricing changes delayed the transition.
Mortgage lenders that have adopted the FICO Score 10 T credit scoring model include Primis Mortgage, a subsidiary of Primis Bank; Movement Mortgage; and CrossCountry Mortgage.
Other lenders may follow suit since regulators plan to replace the classic credit system with an updated one to incorporate trended data.
