Selling Guide

Published September 01, 2021

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B3-5.1-02, Determining the Representative Credit Score for a Mortgage Loan (09/01/2021)

Introduction

This topic contains requirements associated with determining the representative credit score, including:

 

Representative Credit Score

The representative credit score for the loan is determined based on the credit scores of each borrower and is used to determine loan eligibility for manually underwritten loans, certain DU loan casefiles, and for pricing purposes (i.e., assessing LLPAs) on all loans. Follow these steps to calculate the representative credit score for a loan:

Step Description
1

Fannie Mae recommends obtaining at least two credit scores for each borrower.

2

Select a single score for each borrower.

  • When two credit scores are obtained, choose the lower score.

  • When three credit scores are obtained, choose the middle score. (If two of the three scores are the same, choose the middle of the three scores. For example: 700, 680, 680 = 680; 700, 700, 680 = 700)

3

If there is only one borrower, the single score for the borrower is the representative credit score for the loan.

If there are multiple borrowers, determine the applicable credit score for each individual borrower and select the lowest applicable score from the group as the representative credit score for the loan. If there is a borrower who does not have a credit score, determine the representative credit score for the loan based on the credit scores of the other borrowers on the loan.

 Note: For certain DU casefiles, DU will use an average median credit score in place of the representative credit score in the eligibility assessment. See B3-5.1-01, General Requirements for Credit Scores for additional information.

 

Foreign Credit Reports and Credit Scores

With the exception of loan casefiles underwritten through DU, Fannie Mae permits the lender to use a credit report from a foreign country to document a borrower's credit history. (See B3-5.2-01, Requirements for Credit Reports.) If a credit score is provided with the foreign credit report it cannot be used to establish eligibility unless the credit score is the classic FICO, as required by B3-5.1-01, General Requirements for Credit Scores. In addition, the lender must not deliver the foreign credit score to Fannie Mae and it cannot be relied upon to establish eligibility (unless the credit score is the classic FICO). See Section B3–5.4, Nontraditional Credit History, for requirements that apply when a loan includes a borrower without an acceptable credit score.

The table below provides references to the Announcements that have been issued that are related to this topic.

Announcements Issue Date
Announcement SEL-2021-08 September 01, 2021
Announcement SEL-2016–07 August 30, 2016
Announcement SEL-2012–07 August 21, 2012
Announcement SEL-2012–06 June 26, 2012
Announcement 09-32 October 30, 2009
Announcement 09-12 May 4, 2009

 

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