Fannie Mae Deepens Credit History Checking

Like most Americans, you’ve accrued some credit card debt. You’re paying it off, but mostly sticking to just making the minimum payments so that you’re able to meet your other financial obligations. No big deal, right? Sure, you’ll pay more in the long haul because of interest, but credit card companies set minimum payments for a reason and you’re still making your monthly payments on time. Noting all of this, and considering that your credit score and credit history is in pretty good shape, you figure now is the time to apply for that home loan.

Surely you’ll be approved on your credit history and creditscore , right?

Not so fast.

Fannie Mae, the entity responsible for the issuing of government mortgage loans, is digging deeper into the credit history of applicants beyond just their credit history and credit score. That’s right, Fannie Mae is now taking into consideration how applicants are managing their debt as it pertains to approving or denying mortgage loans.


Fannie Mae’s trended credit history check

The latest version of Fannie Mae’s underwriter software is designed to more carefully analyze what it refers to as “trended credit data,” or details about how consumers are specifically managing their debt. Instead of just analyzing whether or not consumers are making their payments on time, the new software version also takes into consideration the following:

  • How much consumers are paying monthly toward balances.
  • The frequency that they are making their payments.
  • Their ability to properly manage debt overall.

For instance, consumers just making the minimum payments on their credit cards aren’t going to be seen as favorably as consumers making more significant payments toward debts or consumers that pay off credit cards each month. This new judging system, in turn, could prevent mortgage applicants from being able to buy a home. Arguably most alarming about these new standards is that Fannie Mae offers government-backed home loans to help make housing more affordable for low- to middle-income Americans. Chances are it’s these low- to middle-income Americans that have these types of debt repayment practices.

This is still in the early phases of rollout and unlikely to take effect immediately. However, Fannie Mae’s new standards may become routine before too long. It could even snowball so that other lenders judge consumers similarly, which could really make things difficult for Americans.

Navigating Fannie Mae

So how can you work around Fannie Mae’s more in-depth consumer considerations if you don’t qualify for a conventional mortgage? It’s all about enacting a viable credit repair plan. To show that even if you have a balance, you’re doing your best to eliminate it from your credit history check and credit score. Here’s a look at some tips for how to eliminate debt and improve your consumer status:

  • Pay off high interest cards first.
  • Contact lenders to see if they’ll give you a lower interest rate.
  • Consider debt consolidation so that you’re only paying off one balance as opposed to several balances.
  • Only spend what you know you can immediately pay off to avoid accruing more debt.
  • Stay disciplined.
  • Come up with a plan: In addition to a base budget, consider putting any additional income (i.e. performance bonuses, tax refunds, cash back rewards, etc.) toward debt repayment.

Debt Consolidation – What is it?

Yes, there are many misconceptions out there about what debt consolidation is. For example, many think it involves the likes of credit counseling or debt settlement, but that’s not the case. So just what is ? It’s simply the act of taking existing debt and paying it off with a new loan with one monthly payment.



Now that you know what it is (and what it is not), let’s take a look at some of the major benefits of it, of which there are several. These include:

  • Easier to manage: Because all of one’s existing debt will be consolidated, payments are generally much easier to manage. That’s because instead of making payments to several lenders, you now only have to worry about making one monthly payment to one lender. Remember, one of the largest factors in your FICO score is making payments on time. Debt consolidation makes this a whole lot easier to do.
  • Lower interest rates: It’s is especially helpful if you make high interest payments to lenders. One of the goals of a successful program is to do it with one, new lender at interest rates that were lower than with previous lenders. That’s when consolidating debt is really, truly worth it. This helps you save money in the long run and, ideally, pay off the amount more quickly than you would have before.
  • No negatives to your credit score: As we noted earlier in this post, many people confuse debt consolidation with debt settlement. Debt settlement is the act of negotiating a reduced balance payment amount with lenders to settle outstanding money owed. It also can take a hit on your credit score if you have to come to that. Debt consolidation is simply combining several payments into one monthly payment, ideally at one overall lower interest rate. As long as you make the one monthly payment on time, it won’t impact your credit score.


Now that you know about it, think about whether or not you may be a good candidate for it. If you have several, smaller loans that you’re paying off at high interest rates and believe you could consolidate them into one, cheaper monthly payment, then it’s time for you to take a hard look at this option. While debt consolidation doesn’t eliminate debt, it can help people feel more confident and at ease about their financial situation based on the money that they’re ideally saving from achieving a lower interest rate. At the same time, however, it’s important for individuals who go the debt consolidation route to be cautious not to take out any more debt before the consolidated loan has been paid off. If that’s the case, then the cycle will just start all over again.