Monday, October 14, 2013

Credit Approved (Flash Fiction)

When I worked for Arrowhead Credit Union, we used a supplemental credit score in addition to the FICO Score as part of our loan underwriting (approval/denial) process for consumer loans. One of my projects was to provide data to Fair Isaac (a.k.a., FICO) so they could create a new custom score based on our own data. 

This story, "Credit Approved," is about your online data being used by lenders to approve or deny your loan application, as postulated by Kate Crawford (a principal at Microsoft research) at MIT's EmTech conference. This story is not a prediction, and I do not know of any specific plans to use online data in this way, but Fair Isaac has been offering scores using "Alternative Data Sources" and also offers "Big Data solutions" on its website today.

Credit Approved

The caller ID said it was the Credit Union, so I answered it right away.

“Hi, Rick,” said the familiar voice of Nial, the loan officer. We expected him to call.

The appraisal already came in $5,000 over the purchase price. The rest was supposed to be a formality.

“I’m afraid there’s a problem. Remember how your credit scores were good, but not great?”

I felt my heart turn to lead and sink into a sour ball in the pit of my stomach. “But you Pre-Approved us.”

“It’s these new loan requirements from Freddie Mac. When your scores are in a certain range, we have to get a supplemental score. It is listed on your credit-approval letter.”

I almost pulled up the letter, but Nial went on.

“Your FIDPO came in too low. It rates your digital profile.” Nial read the denial reasons that came with that score.

“That can’t be right! What can I do about this?”

“You can submit proof they are false, and it’ll take 60 days. Maybe it will raise the score enough, but you’d lose the house by then.”

Pat was going to freak! We’d finally found the perfect house, after a two-year search.

“I know you have more in savings, so I had them run the numbers with larger down payments. Still, the only option is a portfolio loan. The Credit Union would be the lender, but you’d need to double your down payment. We can’t go over 80% Loan To Value. But at least you wouldn’t have to pay for Mortgage Insurance.”

“We needed that money for furniture and stuff.” But it was the best Niall could do.

Pat would just have to understand. We loved the house, and at least we could salvage the deal this way.

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