Skip to main content

Bucking the Trend(ed) (Posted June 6, 2016)

Later this month, Fannie Mae will start requiring Trended Credit Data (TCD) as reported through Equifax and Transunion.  At present, this will not affect FHA or VA loans – but that could change.  So, what is Trended Credit Data, and how will it affect you?

While Fannie Mae, Equifax, and Transunion all use English words to define TCD, the definitions are very long winded and boring, so let me cut to the chase: it means that rather than looking at your credit score as it stands on the day it’s pulled, TCD goes back 24-30 months to examine your credit “behaviors”.  The long and the short of it is this: if the “trended data” shows that you have a large credit card balance, and you pay it in full each month, you have a higher level of credit worthiness than someone who has a large credit card balance and only pays the minimum required amount each month.  Are you with me so far?
 
There are a couple of big ramifications of this new policy, of course, but let me point out one of the most obvious ones: gone are the days of getting bigger near-instantaneous bumps (upward) in your credit score when you pay down a loan or pay off an outstanding credit card balance.  The reason being that now the credit score will be based on how you’re been “trending” for the last 24-30 months: if you’ve been paying the minimum amount on your credit cards for the past two years, making one big payment to wipe out the balance is going to be significantly “downgraded” in importance because you have 23 prior monthly payments showing a completely different behavior.  Buckle up because it gets . . . more interesting.

As part and parcel to this new policy of TCD, the nation’s largest property management company has convinced Equifax and Transunion to include late payments of HOA dues to be factored into a person’s credit score.  Yes, you read that correctly.  And you know that every other property management company, big and small, will follow suit shortly.  The positive side to this is that since it’s going to be viewed through the TCD lens, this means that it will take 12 months, at least (but hopefully longer), to establish a “trend” before it can be included as part of the Trended Credit Data.  For this reason, coupled with the fact rates are as low as they are, now is the time to start looking for that next home purchase – waiting will only give the credit folks time to build up their trended data, and there’s never a guarantee with the rates. 


As for Fannie Mae requiring TCD, there’s no need to get unduly worried.  Will requiring TCD change the options available to you to obtain a loan?  It’s very likely depending on your current credit behaviors.  With that said, though, we have always had more options to present and pursue than other banks and brokers – and we’ll continue to buck the trend(ed). 

Comments

Post a Comment

Popular posts from this blog

Numbers Don't Lie, But Wherein Lies the Truth? (Posted November 21, 2016)

Said with enough conviction, you can make almost anything sound true.   Preface the fabrication with “according to a recent bi-partisan government study,” and you’re three quarters of the way to selling the lie to a lot of people.   Seriously, try this. The next time you’re at a dinner party or having coffee with friends, pepper this little tidbit into the conversation: “I read something really interesting the other day.   According to a recent bi-partisan government study – I think it took them three years to get it all done – middle-aged men who drive either a Toyota Camry or a Honda Odyssey have more testosterone than younger men who drive either a Ford F150 or a Dodge Charger.”   You’ll get some raised eyebrows and looks of mild disbelief, but don’t let that deter you.   Just lift up your hands, palms outward, and say, “I just think it’s interesting, and it makes sense when you think about it” – and then change the subject to something completely u...
Post a Comment
Read more

The Naked Truth About Home Buying

It’s highly likely I’ve already written about this, but I’ll try to make it entertaining at least.   There’s a guy who works in ou r office who suffers from kidney stones – and from what he’s described, “suffers” might even be a little too tame a word for it.   As an aside, though, when you ask him how painful the experience is, he gets an odd smile and says, “It’s the most intense pain I’ve ever experienced, but it’s hard to describe.   I’ve heard a lot of people compare it to the pain a woman experiences while giving birth.   To that, I must say, those people are big, fat liars!   I’ve been in the presence of a woman giving birth, twice, and her pain has to be 100 times worse.   They’re passing the equivalent of a Buick.   I’m passing a pumpkin seed.”   He’s always been a colorful fellow. He’s had this wonderful condition for over a decade now, and the stones make their appearance about every 18 months or so.   Up until recently, ...
Post a Comment
Read more

The Waiting (is the Hardest Part)

Full disclosure: this week’s missive is more for the consumer than for the realtor.   I can promise, though, that for all the realtors who read this, you’ll most likely find yourself saying or thinking something along the lines of “preach on, brother”, “testify”, “amen”, or “you got that right”.   W ith that in mind, I implore you ALL to read on.   Recently, I received my monthly wireless phone bill, and it was $20 higher than it should have been.   I had made some changes on my plan a little before that, but my monthly bill’s amount was supposed to stay virtually the same – in fact, my first bill after the changes was a little bit less than my usual amount.   Bonus!   Befuddled, I called the company and asked the operator to help me understand why my bill was $20 higher and then find a way to get it back down to the price I had been promised when I had made the changes to my plan.   Long story short: the operator with whom I had originally m...
Post a Comment
Read more