Mortgage lenders may choose to use the FICO 2 scoring model instead of FICO 8 for several reasons. Firstly, FICO 2 is specifically tailored for the mortgage industry, making it more customized to assess credit risk in the context of home loans. It places significant emphasis on mortgage-related data, including how borrowers have managed their past mortgage payments. This specialized focus allows mortgage lenders to obtain a more precise evaluation of a borrower’s ability to handle mortgage obligations, making it a preferred choice in the mortgage lending sector.
Secondly, FICO 2 may be favored by mortgage lenders because of its historical relevance and familiarity. Mortgage lending is a conservative and risk-averse industry, and lenders tend to be cautious about adopting new scoring models. FICO 2 has been used for a longer period in the mortgage industry, building trust among lenders. The familiarity and extensive use of FICO 2 in the mortgage sector provide a sense of stability and consistency for lenders, which can be crucial when making significant lending decisions.
Finally, FICO 8, being a more modern model, incorporates a broader range of credit data and may consider certain non-traditional data sources. However, these additional factors may not always be directly relevant to mortgage lending decisions. Mortgage lenders often focus primarily on traditional credit factors, such as payment history, outstanding debt, and mortgage-specific information. Therefore, the simplicity and industry-specific nature of FICO 2 might align better with the needs and risk evaluation preferences of mortgage lenders, making it their preferred choice over FICO 8.