Mortgage Lenders Looking At Lower Credit Borrowers

By Kyle Chezum Updated on 9/25/2013

According to Experian, the well known credit reporting agency, mortgage lenders are looking for potential borrowers outside of the current requirements for high credit consumers. Experian stated in a recent white paper that portfolio growth objectives can not be met by mortgage lenders without expanding the market base for potential borrowers. It appears the lenders are having difficulty with strategies for targeting prospects with lower than pristine credit scores.

Michael Pearson, vice president of product management at Experian, estimates that 17.3 million prospects for new mortgage originations are being overlooked by lenders, mostly due to many of these otherwise reliable consumers have little credit history.

According to Pearson, the new VantageScore system that was developed by the three major credit reporting companies which enables lenders to score more consumers more accurately, could asses better 10.5 million of excluded consumers mortgage creditworthiness.

The scenario ran on the whitepaper which 52% of “near prime” consumer population of 865,111 are measured for mortgage creditworthiness, dropping likely bad borrowers, shows a new mortgage potential of $3.86 billion in missed business.