B3-5.1-01, General Requirements for Credit Scores (10/05/2022)

Credit scores are required for most loans purchased or securitized by Fannie Mae. The classic FICO credit score is produced from software developed by Fair Isaac Corporation and is available from the three major credit repositories. Fannie Mae requires the following versions of the classic FICO score for both DU and manually underwritten mortgage loans:

• Equifax Beacon® 5.0;

• Experian®/Fair Isaac Risk Model V2SM; and

• TransUnion FICO® Risk Score, Classic 04.

The lender must request these FICO credit scores for each borrower from each of the three major credit repositories when they order the three in-file merged credit report. If the borrower’s credit file includes complete and accurate information to ensure the validity of the credit score, the lender does not need to further evaluate the borrower’s creditworthiness.

Note: The credit report will indicate if a credit score could not be produced due to insufficient credit. The credit report must be maintained in the loan file, whether the report includes traditional credit and a credit score or indicates that a credit score could not be produced due to insufficient or frozen credit.

The following table describes the minimum credit score requirements and how to determine the loan-level credit score that applies to loan eligibility.

See  B3-5.1-02, Determining the Credit Score for a Mortgage LoanB3-5.1-02, Determining the Credit Score for a Mortgage Loan for additional information.

Certain transactions are not subject to the minimum credit score requirement, including:

• loans where no borrower has a credit score (see Section B3–5.4, Nontraditional Credit History);

• manually underwritten HomeReady mortgage loans that include a borrower with a low credit score (see  B5-6-02, HomeReady Mortgage Underwriting Methods and RequirementsB5-6-02, HomeReady Mortgage Underwriting Methods and Requirements); and

• high LTV refinance loans, except for those loans underwritten using the Alternative Qualification Path.

Credit scores are not an integral part of DU's risk assessment because DU performs its own analysis of the credit report data. However, lenders must request credit scores for each borrower from each of the three credit repositories when they order the three in-file merged credit report, described in B3-5.2-01, Requirements for Credit ReportsB3-5.2-01, Requirements for Credit Reports. If one or two of the credit repositories do not contain any credit information for the borrowers who have traditional credit, the credit report is still acceptable as long as

• credit data is available from one repository,

• a credit score is obtained from that repository, and

• the lender requested a three in-file merged report.

Note: When a loan casefile is submitted to DU for a borrower with a credit score, but only medical tradelines are reported on the credit report, the loan casefile will receive an Out of Scope recommendation. The lender can manually underwrite the loan casefile in accordance with the Selling Guide.

If the transaction does not meet the above requirements, refer to Section B3–5.4, Nontraditional Credit History, for underwriting and eligibility requirements for DU loans in which one or more borrowers do not have a credit score.

Frozen Credit Requirements

If the borrower’s credit information is frozen at one of the credit repositories for borrowers who have traditional credit, the credit report is still acceptable as long as

• credit data is available from two repositories,

• a credit score is obtained from at least one of those two repositories, and

• the lender requested a three in-file merged report.

Loans for borrowers with credit data frozen at two or more of the credit repositories will not be eligible whether underwritten manually or in DU.

Loan Delivery collects credit score data for each borrower and also at the loan level. Lenders are required to deliver the representative credit score for all loans. This applies even if the average median credit score is used for loan eligibility and may result in delivery of loans with representative scores less than 620. For additional information, see the Loan Delivery Job Aid: Credit Scores.

Loan-level price adjustments (LLPAs) are assessed based on the representative credit score for the loan, in addition to other eligibility and loan features. See the Loan-Level Price Adjustment (LLPA) Matrix for additional information about LLPAs, including information about how LLPAs are assessed for loans that include borrowers without a credit score.