Doesn using the score mean fewer people will get mortgage loans?
No, in fact the opposite may be true. Credit Bureau Scoring is just one of several ways that lenders and the secondary market decide whether to lend someone money, and under what terms. Lenders or investors set the underwriting guidelines. The investor typically sets score cuts-offs such that they offer mortgage loans to the same number of borrowers irrespective of the use of scoring. The lender used the Credit Bureau Score to determine if the borrower exceeds the acceptable level of risk for the product being offered. If the score on a borrower’s credit report is too low for a given product, that does not mean the score is too low for other products. In the past we have seen that once lenders are able to accurately identify the credit risk of all applicants, they can create products designed and price for various market segments, ultimately extending credit to more people.
