Trended data. a credit scoring model used by Experian, benefits homebuyers who have a better credit history over a longer stretch of time than a shorter one.
Trended Data Defined
Applying for a mortgage is complicated and there are lots of terms that may be new to you. For example, you may wonder what trended data or “trended credit data” and how it will affect your loan application. It’s the information that credit bureaus gather on how consumers manage their credit card balances, and it goes beyond paying your credit card bills on time each month. Trended credit data appeared around 2016 allowing mortgage lenders to differentiate between types of credit usage. The updated model—Trended 3D—uses trended data to provide information on borrowers’ balances and credit lines over the past 24 months. That’s a longer view of consumers’ behavior than traditional credit reports provide.
Do You Carry a Balance on Your Cards?
Lenders prefer “transactors” who pay off their credit card balances every month over “revolvers” who carry balances from month to month. Trended 3D makes a distinction between those types of borrowers, giving lenders a better view of applicants use of their credit – and awarding transactors with a credit-scoring advantage.
Mortgage lenders prefer borrowers who pay off their credit cards each month. If not, they like to at least see borrowers carry shrinking balances because they’re paying more than the minimum payment each month. What they don’t want to see is someone making the minimum payment on their credit cards and having credit balances growing.
Trended Data Can Benefit You
The number of borrowers who are eligible for the lowest mortgage rates could increase through the use of trended credit data if they’ve paid off their credit card balances each month for most of the past two years. Remember, lenders love those transactors who pay off their credit card balances each month.
How Fannie Mae Uses Trended 3D
Fannie Mae started using Trended 3D in 2016 with its automated underwriting software. The government-backed home loans are used by more than 1,800 lenders. The extra data is supposed to give some borrowers more access to credit than they would have under the old scoring models.
Fannie Mae only uses trended credit data for conventional loans. It doesn’t use that information when making approval recommendations for FHA-insured or VA-backed mortgages.
Please ask us for our recommendations of great lenders for you to talk with as you get ready to make your loan application.