There is a new “trend” in mortgage loan underwriting, but thankfully, it’s not Pokémon Go, skinny jeans, or wearing a smart watch. Instead, the Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, announced that they will soon require all lenders to use “Trended Credit Data” when underwriting single-family homes for mortgage loans.

In case you’re not up on the latest “trends” (if you see hundreds of young people walking around like zombies at your local park staring at their phones, now you’ll know that Pokémon Go is the culprit!), Trended Credit Data is historical information on a consumer’s credit behavior. It includes up to 24 months of tradeline credit reporting with information like balance, credit limit, high credit, scheduled payment and actual payment documented.
Fannie Mae mandated the credit reporting shift to include Trended Credit Data because, per FNMA, their underwriting emphasis is now on evaluating better credit risk analysis on revolving accounts, and Trended Credit Data will allow them to do just that.

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Specifically, Trended Credit Data will give lenders insight into how borrowers manage their revolving credit lines, revealing if they typically pay off their credit cards and other revolving credit lines every month, just pay minimum payments, or carry a significant balance month-to-month.
Reportedly, not all tradelines on a credit report will reflect Trended Credit Data. Here are some examples of accounts and tradelines that probably won’t display the new information:

  •   Authorized User Child/Family Support Collections
  •   Duplicate trade
  •   Insufficient Information to Score: File contains no trade, inquiry, collection or public
  • record.
  •   Less than 6 months of history in an Open status.
  •   Lost/Stolen
  •   Masked trade data for certain narrative codes (bankruptcy, in dispute, medical,
  • repossession, foreclosure, etc.)
  •   Months since reported > 24
  •   Public Records
  •   Subject Deceased

The scheduled release of Trended Credit Data has been somewhat choppy, with some credit reporting systems implementing it earlier than others, and some lagging. FICO and VantageScore do not consider trended credit data, so it’s To Be Determined how they’ll sync with underwriting. But starting September 24, 2016, Fannie Mae’s underwriting process will require Trended Credit Data.

As of now, Trended Credit Data is not available for all three credit bureaus, as Equifax and TransUnion have gotten on board but Experian isn’t expected to change their system until possibly January of 2017 to meet the new requirements.
The changes to a consumer’s credit information may appear subtle, but Fannie Mae hopes have a profound impact on credit risk analysis and underwriting proficiency. For instance, Trended Credit Data will reflect the balance on a revolving account after the monthly payment is made, not before, and all active tradelines could see the changes, although each bureau has exclusions.

Trended Credit Data will also display on the consumer version of credit reports, so the public will be able to access the same data that Fannie Mae and underwriters are using to make decisions.

If you have questions about Trended Credit Data (but NOT Pokémon!) please contact Blue Water Credit and we’re happy to explain it and send you the official FAQ on Trended Credit Data.