When Fannie Mae and Freddie Mac released historical FICO Score 10T data on July 1, it marked a long-anticipated step in efforts by the Federal Housing Finance Agency (FHFA) to expand beyond the mainstay Classic FICO credit scoring model for evaluating mortgage default risk.
While FICO is “very pleased” the historical loan-level data has been published by the government-sponsored enterprises (GSEs), the data analytics company is cautioning that it comes with a “built-in limitation” that credit analysts and underwriters should note.
“Because the GSEs have historically utilized a Classic FICO Score cutoff of 620 for loan approval, the dataset is truncated: virtually all applicants whose Classic FICO Score was below 620 are absent from the data...