12 CFR 1254.4 – Requirements for use of a credit score
(a) Enterprise use of a credit score. An Enterprise is not required to use a credit score for any business purpose. However, if an Enterprise conditions its purchase of a mortgage on the provision of a credit score for the borrower:
Terms Used In 12 CFR 1254.4
- Credit Score: A number, roughly between 300 and 800, that measures an individual's credit worthiness. The most well-known type of credit score is the FICO score. This score represents the answer from a mathematical formula that assigns numerical values to various pieces of information in your credit report. Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
(1) The credit score must be derived from a credit score model that has been approved by the Enterprise in accordance with this part; and
(2) The Enterprise must provide for the use of the credit score by any automated underwriting system that uses a credit score and any other procedures and systems used by the Enterprise that use a credit score for mortgage purchases.
(b) Replacement of credit score model. An Enterprise may replace any credit score model then in use after a new credit score model has been approved in accordance with this part.
(c) No right to continuing use. Enterprise use of a particular credit score model does not create any right to or expectation of continuing, future, or permanent use of that credit score model by an Enterprise.