FICO Scoring System Gets Redesign

Fair Isaac Corp., the company that devised the ubiquitous FICO credit scores, announced this week that it plans to roll out a suite of tools designed to predict future default risk.

Fair Isaac says the new products will predict how lenders can offer even more debt to consumers without taking on undue risk.

The update revamps the old credit-scoring formula so that it penalizes consumers with a high debt load more than the earlier version. FICO 08 should increase predictive strength by 5 to 15 percent, according to Fair Isaac's vice president of scoring, Tom Quinn.

FICO 08 is also expected to do a better job of determining which consumers with past defaults are "more on the road to recovery and should have more of a higher score," Quinn says.

The new index can look at three consumers with a 700 FICO score and determine which of the three could take on additional debt without defaulting, according to the company.

Source: Star-Tribune, Kara McGuire (01/22/08)
Daily Real Estate News | January 30, 2008

Mortgage Rates Inch Up

Daily Real Estate News | February 1, 2008

Mortgage Rates Inch Up

Following four consecutive weekly declines, Freddie Mac reports a jump in the 30-year fixed mortgage rate to 5.68 percent during the week ended Jan. 31 from 5.48 percent the prior week.

The 15-year fixed mortgage rate rose to 5.17 percent from 4.95 percent over the same time span.

Meanwhile, the five-year adjustable mortgage rate edged up to 5.32 percent from 5.13 percent; and the one-year ARM climbed to 5.05 percent from 4.99 percent.

Freddie Mac chief economist Frank Nothaft attributes the recent gains to an uptick in 10-year Treasury bonds.

Source: San Jose Mercury News (Calif.), Martin Crutsinger (02/01/08)