One of the three major credit bureaus has added alternative data to its mortgage credit reports, saying it will help reduce risk sooner in the mortgage decisioning process.

TransUnion described TruVision Alternative Credit Attributes 2.0 data as an enhancement that gives lenders “earlier insight into borrower stability and intent” during the prequalification stage.

The ACA 2.0 data comes from TransUnion’s 2017 acquisition of FactorTrust and incorporates borrower histories that include installment loans, rent-to-own financing, certain unsecured lines of credit, auto title loans and other nontraditional lending products. The data set includes nearly 300 million credit inquiries, about 64 million consumers with alternative credit records, about 45 million tradelines and broad coverage of U.S. consumers.

TransUnion says those records can help lenders assess borrowers whose financial behavior may not be fully reflected in traditional credit files.

According to Satyan Merchant, senior vice president and leader of the automotive and mortgage reporting segments at TransUnion, these additional signals will help lenders gain a more complete view of a borrower’s financial behavior.

Merchant told Scotsman Guide that mortgage lenders will appreciate ACA 2.0 because it offers “more signals that I think anyone issuing a loan or trying to underwrite a loan would want to be able to understand and see.”

Lenders can use this data right away, Merchant said, which will help as they aim to identify borrower quality early in the process — especially in the current mortgage environment with higher interest rates and affordability challenges.

“When we talk to lenders, we know that they’re really committed to ensuring that they give their borrowers the right experience,” Merchant said. “They don’t carry a borrower down a path where ultimately, they may not be eligible for a loan or cannot complete the transaction. That’s a bad experience for the borrower [and] it’s a waste of time and money for the lender.”

Merchant said the data can also help lenders become more operationally efficient in the current market.

The data set is used in “every other lending line in the U.S. lending system,” Merchant noted, like for unsecured personal loans, auto loans and credit card issuers. It is Fair Credit Reporting Act permissible and regulated the same way as traditional credit data.

Though ACA 2.0 has not yet been implemented by the automated underwriting systems used by government-sponsored enterprises Fannie Mae and Freddie Mac, Merchant said he would not be surprised if the new data is eventually incorporated, saying it is on their road maps.

“That doesn’t mean it’s still not of any value for a lender,” Merchant said. “I think at the end of the day, the lenders want to try to safely and soundly originate as many loans as possible and get the right customer in the right products.”