Credit scoring is an important part of computerized loan origination and it is becoming commonplace. Here's how this type of origination works: A loan agent, or mortgage broker, enters the prospective borrower's loan application into a computer. The borrower's data is then electronically transmitted to a loan processing center for underwriting and approval. Some lenders use artificial intelligence software programs to electronically underwrite loans.
One element of streamlined underwriting, which enables lenders to objectively evaluate risk and make informed loan approval decisions quickly, is credit scoring. Credit scoring has been used for years for speedy car loan and credit card approval.
Several companies provide credit scoring models. One of the most widely used was developed by the Fair, Issac company. The Fair, Issac score analyzes the interrelationship among approximately 100 variables, utilizing information gleaned from your credit file data at the three national credit bureaus (TRW, Trans Union and Equifax).
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