![\"This](\"http:\/\/www.anthonydidonato.net\/wordpress\/wp-content\/uploads\/2016\/01\/what-does-fico-stand-for-and-what-is-a-fico-credit-score-612x281.jpg\")
<\/a>This Lender Says It\u2019s Going FICO-Free<\/p><\/div>\n
<\/p>\n
SoFi, an online lender, is making a bold move: Eliminating FICO scores from its consideration when reviewing borrowers\u2019 for a mortgage. It claims to be the first large lender to embrace the \u201cFICO-Free Zone.\u201d<\/p>\n
The company says it plans to use three other factors instead to determine whether borrowers are credit-worthy: Employment history, the applicant\u2019s record of making on-time payments and meeting financial obligations; and monthly cash flow minus expenses.<\/p>\n
“Banishing traditional credit scores stems from SoFi’s belief that the FICO model is flawed and outdated; it’s less of an indicator of how a borrower will behave in the future, but rather, a reflection of past behavior,\u201d the company states. \u201cWhile the industry is moving toward evaluating non-traditional factors during the application process, most lenders still incorporate FICO scores into their proprietary algorithms and underwriting models.\u201d<\/p>\n
The move could help millennials, a group where credit scores could be becoming less relevant too. Sixty-three percent of millennials between the ages of 18 and 29 say they don\u2019t have a credit card, according to a survey by Bankrate and Princeton Survey Research Associates International.<\/p>\n
“Our approach to underwriting is based on transparency and balancing the needs of our members and investors, and we found that the FICO score was anything but transparent. So we threw it out,\u201d says Mike Cagney, CEO and co-founder of SoFi, a company that has funded more than $6 billion in loans. “We’re proud to be the only major lender that does not use the score for any lending. Instead of relying on a three-digit number to tell us who’s qualified, we look for applicants who have historically paid their bills on time and make more money than they spend. It’s that simple.\u201d<\/p>\n
SoFi\u2019s announcement comes at a time when the industry has been taking a closer look at the accuracy of FICO scores. For example, a current bill being considered \u2013 the Credit Score Competition Act of 2015 \u2013 would allow Freddie Mac and Fannie Mae to be able to use credit scoring models besides FICO, if approved.<\/p>\n
Source: \u201cLender Drops FICO From Underwriting Decisions; Stearns\u2019 TRID Defects,\u201d Mortgage News Daily (Jan. 14, 2016)<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"This Lender Says It\u2019s Going FICO-Free SoFi, an online lender, is making a bold move: Eliminating FICO scores from its consideration when reviewing borrowers\u2019 for a mortgage. It claims to be the first large lender to embrace the \u201cFICO-Free Zone.\u201d The company says it plans to use three other factors instead to determine … <\/p>\n
Continue reading<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,8],"tags":[5,32,4,9],"class_list":["post-8871","post","type-post","status-publish","format-standard","hentry","category-news","category-real-estate-tips","tag-anthony-didonato","tag-news","tag-real-estate","tag-tips","item-wrap"],"yoast_head":"\nThis Lender Says It\u2019s Going FICO-Free - Real Estate Agent and Sales in PA - Anthony DiDonato Broomall, Media, Delaware County and surrounding areas in Pennsylvania<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/www.anthonydidonato.net\/wordpress\/this-lender-says-its-going-fico-free\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/this-lender-says-its-going-fico-free\\\/#article\",\"isPartOf\":{\"@id\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/this-lender-says-its-going-fico-free\\\/\"},\"author\":{\"name\":\"admin\",\"@id\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/#\\\/schema\\\/person\\\/964792b6994e8cc4cbddc36ad4824908\"},\"headline\":\"This Lender Says It\u2019s Going FICO-Free\",\"datePublished\":\"2016-01-18T15:55:52+00:00\",\"dateModified\":\"2016-01-18T15:55:59+00:00\",\"mainEntityOfPage\":{\"@id\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/this-lender-says-its-going-fico-free\\\/\"},\"wordCount\":387,\"publisher\":{\"@id\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/#\\\/schema\\\/person\\\/964792b6994e8cc4cbddc36ad4824908\"},\"image\":{\"@id\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/this-lender-says-its-going-fico-free\\\/#primaryimage\"},\"thumbnailUrl\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/wp-content\\\/uploads\\\/2016\\\/01\\\/what-does-fico-stand-for-and-what-is-a-fico-credit-score-612x281.jpg\",\"keywords\":[\"Anthony DiDonato\",\"News\",\"Real Estate\",\"tips\"],\"articleSection\":[\"News\",\"Real Estate Tips\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/this-lender-says-its-going-fico-free\\\/\",\"url\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/this-lender-says-its-going-fico-free\\\/\",\"name\":\"This Lender Says It\u2019s Going FICO-Free - 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