In September both Equifax & TransUnion began to offer ‘trending data’ to mortgage lenders. Traditionally your credit reports have only shown whether you paid a credit card bill on time or not, but they didn’t differentiate between paying the balance in full and making the minimum payment.
Trending data does make this differentiation and it’s an important one, according to Fannie Mae all other things being equal somebody that pays off their credit card in full is 60% less likely to become delinquent or default on their loan as somebody who only makes the minimum payment.
This makes sense from a logical perspective as somebody who is only making the minimum payment on a likely high APR loan is more likely to be under financial hardship or duress than somebody who is paying their credit card in full. Obviously it’s up to individual mortgage lenders to decide whether or not they will actually use this information or not and current scoring models will not take it into account (due to it not being previously available). I suspect further iterations will take this into account for mortgage specific scores.
One of the things to keep in mind is that this will not affect how credit utilization is reported, remember that is accounts for 30% of your FICO score. You’ll want to know when your credit cards report their balances to the consumer reporting agencies so you can pay off your card before they do to reduce your overall credit utilization.
It’s also expected that Experian will begin to record this data as well. Also thanks to this /r/churning thread for making me aware of this, not sure how I missed it.
