Rate, one of the largest mortgage lenders and leading fintech companies in the United States, has integrated FICO Score 10T into its credit evaluation process. By adopting what is described as the industry’s most predictive credit scoring model, Rate aims to expand its risk management capabilities and provide customers with more responsible access to credit. This move allows the lender to leverage advanced analytics to better understand a customer’s full credit picture during the mortgage application process.
Rate's Integration of FICO Score 10T for Diverse Loan Products
As a top U.S. mortgage lender by origination volume, Rate operates across a wide range of mortgage products, including conventional, FHA, VA, jumbo, non-QM, and HELOCs. This diverse product mix positions the company to implement FICO Score 10T at scale. By utilizing the model, Rate can leverage trended credit bureau and rental history data to gain a more comprehensive and predictive view of borrower risk. Victor Ciardelli, CEO of Rate, stated that the model provides lenders with more insight, which helps the company make smarter decisions and create more opportunities for qualified borrowers, emphasizing that Rate continues to seek technology that helps more people move forward with confidence.
FICO Score 10T Free Access Program and Market Reach
The adoption by Rate significantly increases the total participating volume of the FICO Score 10T Free Access Program, which now represents $538.72 billion in originations and a $1.668 trillion servicing portfolio. To date, more than 60 lenders have signed up for the program. This initiative allows lenders to evaluate the new model at no cost alongside the Classic FICO score, enabling side-by-side testing of the findings without the requirement to pay for an additional score.
Predictive Capabilities for Mortgage Risk Management
FICO Score 10T analyzes credit behavior over time through trended data to offer a more predictive view of borrower risk than previous models. According to FICO, the model's capabilities could enable up to a 17% reduction in delinquencies or allow for up to 5% more loan approvals without increasing risk. Julie May, vice president and general manager of B2B Scores at FICO, noted that Rate's adoption reflects a trend of lenders setting a higher bar for mortgage credit decisioning as the industry focuses on modernization and leveraging the most predictive scores available.
Key Takeaways
- Rate has adopted FICO Score 10T to analyze trended credit bureau and rental history data for mortgage credit evaluations.
- The FICO Score 10T Free Access Program now includes over 60 lenders, representing $538.72 billion in originations.
- FICO claims the 10T model could potentially reduce delinquencies by up to 17% or increase loan approvals by up to 5% without adding risk.
FinanceInsyte's Take
The shift toward trended data and rental history suggests a move toward more granular risk assessment in the mortgage sector. Executives should monitor whether the projected 5% increase in approvals and 17% reduction in delinquencies materialize across a broader lender base. The success of the Free Access Program will likely determine the speed of industry-wide migration from Classic FICO scores.
Source: Fico
