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"Scoring models", as they are called, became important
as early as 1994. The use of scoring models in the mortgage industry came about as the major secondary market players, known
as Fannie Mae and Freebie Mac, started to develop automated underwriting systems. They had been in use for a long time for
auto lenders and credit card issuers. Scoring models figure prominently in the future of how people obtain home
mortgages.
Most people know that most creditors use credit report agencies for obtaining information on a person when
they have applied for any type of financing. However, there are actually two levels of credit reporting agencies. There are
three major repositories of credit and background information. They are Equifax, Experian and TransUnion. When someone obtains
credit, the creditor reports the payment history to these repositories. This is usually done monthly but may be done on an
irregular basis. These repositories simply accept the information as it comes in electronically and they DO NOT check the
accuracy of the information.
The credit repositories and other agencies also maintain other background information
on every person in the country who has a Social Security number or other identifying information. The other agencies may include
the Department of Motor Vehicles, the Medical Information Board, the FBI, local law enforcement agencies, the county recorders
for each county (public records repositories), etc. Even the mortgage industry has a central repository for borrowers and
lenders who may have been involved in fraudulent activities in the making of mortgage loans.
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