CrossCountry Adopts FICO 10 T For Non-QM, MBS

CrossCountry Mortgage has adopted FICO Score 10 T for non-QM loans and securities.

The goal of using FICO 10 T is to expand the number of people eligible for mortgages based on their credit scores. FICO says its new model can increase mortgage approval rates by up to 5% without additional risk, as well as reduce delinquencies by 17% for many consumers.

“CrossCountry Mortgage’s astute decision to adopt FICO Score 10 T demonstrates its commitment to innovation, credit access, and responsible business growth,” Julie May, vice president and general manager of Scores at FICO, said.

“By leveraging FICO’s most predictive credit scoring model, CCM is at the forefront of meeting the needs of today’s borrowers and investors.”

CCM is the latest lender to use 10 T for non-conforming loans, with Movement Mortgage having switched last October. But CCM is the first lender to base 100% of its mortgage-backed securities solely on the new model.

“This first-ever instance of FICO Score 10 T applied to an MBS pool will show investors, rating agencies, and other stakeholders a real-world example of the improved predictive performance offered by FICO Score 10 T,” a press release says.

The 10 Suite, including 10 and 10 T, was released in December 2020. The Federal Housing Finance Agency validated it and VantageScore4 for the GSEs in 2022.

10T credit scores include borrowers’ payment and debt history for the prior 24-plus months to help calculate their credit scores. It considers late payments and debt more harshly, however.

FICO isn’t the only game in town for credit scoring, however. FormFree released the Residual Income Knowledge Index, its alternative to the traditional credit score model, in October 2021.

RIKI uses bank and credit card statements procured directly from financial institutions to give lenders an understanding of a borrower’s discretionary funds after mandatory monthly expenses.

“What RIKI does is it looks at all the transactions, income and expenses, calculates income, identifies if it is consistent monthly income or if it is a one-off transfer, and then the lender can see that,” FormFree’s Chief Customer Officer Christy Moss told The Mortgage Note.

A survey conducted last year found that insufficient credit scores were one of the biggest barriers to homeownership for 40% of respondents.