Planet Home Lending to Use FICO Score 10 T for Deeper Insights into Mortgage Origination and Servicing Credit Performance
- Planet Home Lending partners with FICO to utilize FICO® Score 10 T for mortgage originations and retention analytics.
- FICO Score 10 T aims to improve credit risk management, reduce default rates, and increase mortgage originations by up to 5 percent.
- The new scoring model can lower default risk and losses by up to 17 percent while providing lenders with more accurate cash flow projections.
- Planet Home Lending's proactive adoption of FICO Score 10 T showcases its commitment to innovation in the mortgage industry.
- FICO is dedicated to supporting mortgage industry participants in transitioning to FICO® Score 10 T through its Migration Resource Center.
- None.
Insights
The integration of FICO Score 10 T by Planet Home Lending signals a significant shift within the mortgage industry towards more sophisticated risk assessment tools. By utilizing the latest in credit scoring technology, Planet Home Lending is positioning itself to gain a competitive advantage in mortgage origination and customer retention. The ability to predict defaults with greater accuracy and manage credit risk more effectively is a key differentiator in the financial services sector. The potential increase in mortgage originations and reduction in losses mentioned could translate into improved financial performance for the company and potentially affect its stock valuation positively if these benefits are realized.
Furthermore, the adoption of FICO Score 10 T is indicative of the industry's broader move towards data-driven decision-making. This trend is likely to continue as lenders seek to optimize their operations and offer more competitive credit terms. For investors, this could mean a shift in the landscape where companies that leverage such technologies effectively could outperform their peers, making them attractive investment opportunities. The reported high recapture rates of up to 89% suggest strong customer retention capabilities, which is vital for sustained revenue streams and profitability.
Planet Home Lending's proactive adoption of FICO Score 10 T reflects an industry-wide acceleration in the adoption of advanced analytics. The mortgage industry is particularly sensitive to changes in credit risk management due to the large financial implications of loan defaults. The utilization of more predictive scoring models can lead to a reshaping of market dynamics, where lenders like Planet Home Lending may be able to offer more attractive terms to a broader customer base without incurring additional risk. This could potentially increase market share and pressure competitors to also innovate or risk falling behind.
From a market perspective, the announcement could signal to investors that Planet Home Lending is committed to using technology to enhance its business model. This could influence investor confidence and attract attention from those interested in companies that are innovating within their operational processes. As other lenders follow suit, there could be a ripple effect, leading to a more stable mortgage market with lower default rates, which in turn could have positive implications for the broader financial sector.
The adoption of FICO Score 10 T by Planet Home Lending represents a strategic move in credit risk management. The enhanced predictive capabilities of this new scoring model allow for a more nuanced understanding of borrower behavior, which is particularly important in the context of a fluctuating economic environment. By being able to more accurately project cash flows and assess the creditworthiness of borrowers, Planet Home Lending can tailor its lending practices to minimize exposure to bad debt while also expanding its customer base.
This development is noteworthy for stakeholders who monitor credit risk trends and strategies within the financial industry. The emphasis on predictive analytics demonstrates a commitment to risk mitigation and operational efficiency, which are critical factors in maintaining a healthy loan portfolio. The potential reduction in default risk by up to 17 percent, as cited, is a substantial figure that could lead to significant savings and more resilient financial standing for the lender in the face of economic downturns.
Will use most predictive score to compare loans, retain existing customers
As part of this move, the mortgage leader will use FICO’s newest, most innovative and predictive scoring model to analyze government and conventional loans originated by its distributed retail division or purchased by the correspondent division. Planet will also employ FICO Score 10 T to further enhance retention and recapture analysis. The company currently posts verified recapture rates as high as
“We’re eager to tap the power of FICO Score 10 T to further analyze our book of business and unlock new origination opportunities to support our continued growth,” said Planet Home Lending President, Mortgage Lending, John Bosley “Our decision to proactively incorporate this latest scoring model aligns with our overarching commitment to innovation and helping those we serve to succeed.”
Planet’s use of FICO® Score 10 T adds to the momentum of the mortgage industry in proactively adopting the new credit scoring model. Lenders including Cardinal Financial, Primis Mortgage, Premier Lending and others have recently adopted the model for non-conforming mortgages.
FICO® Score 10 T provides greater precision in making lending decisions. FICO Score 10 T can help lenders better manage credit risk and lower default rates while extending competitive credit offers to consumers. FICO Score 10 T can enable an increase in mortgage originations of up to 5 percent (without taking on additional credit risk) and can reduce default risk and losses by up to 17 percent. The more predictive FICO Score 10 T also helps lenders project cash flows more accurately.
“Planet’s use of FICO Score 10 T affirms its position as a forward-looking industry leader,” said Joe Zeibert, vice president of Mortgage and Capital Markets at FICO. “With the help of FICO’s innovative score, Planet gains access to deeper insight into borrower credit health, and predictive power to help manage credit risk.”
FICO is committed to assisting mortgage industry participants looking to transition to its most current model, FICO® Score 10 T. The FICO Score Migration Resource Center provides a detailed guide to support organizations through their score transition with key planning steps and activities, in addition to implementation best practices.
About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 4 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by
Learn more at https://www.fico.com.
Join the conversation at https://twitter.com/fico & https://www.fico.com/en/blogs/.
For FICO news and media resources, visit www.fico.com/news.
FICO is a registered trademark of Fair Isaac Corporation in the
About Planet Home Lending, LLC
Planet Home Lending, LLC,
For more information about Planet Home Lending, please visit https://planethomelending.com or https://phlcorrespondent.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240409829498/en/
FICO Media Contact
Julie Huang
Press@fico.com
Source: FICO
FAQ
What scoring model will Planet Home Lending use for mortgage originations and retention analytics?
How can FICO Score 10 T help lenders in making lending decisions?
What percentage increase in mortgage originations can FICO Score 10 T enable without taking on additional credit risk?
By how much can FICO Score 10 T reduce default risk and losses?
What does FICO offer to support organizations transitioning to FICO® Score 10 T?
