United Wholesale Mortgage (UWM) has eliminated its minimum credit score requirement for agency loans, effective immediately. The lender will now rely on automated underwriting system (AUS) decisions for borrower eligibility, though credit scores will still influence pricing and loan-level price adjustments.
The removal of minimum credit score overlays by a major wholesale lender like UWM could expand access to agency-backed mortgages for borrowers with lower credit scores, potentially increasing loan origination volumes in the mortgage market.
United Wholesale Mortgage (UWM) announced Wednesday that it is immediately removing its minimum credit score overlay for agency loans. This change applies to conventional loans backed by Fannie Mae and Freddie Mac, as well as FHA, VA and USDA loans guaranteed by Ginnie Mae.
Instead of a minimum credit score, UWM will now use automated underwriting system (AUS) decisions to determine borrower eligibility. Credit scores will still be factored into loan pricing and agency loan-level price adjustments (LLPAs).
Mat Ishbia, UWM’s president and CEO, stated that while credit scores are part of the assessment, they do not provide a complete picture of a borrower's qualification. He noted that AUS offers a more comprehensive evaluation by considering numerous factors in a borrower's financial profile, aligning with the approach taken by Fannie Mae, Freddie Mac, and Ginnie Mae.
Minimum credit score requirements will continue to be enforced for UWM’s jumbo, Bank Statement, and Investor Flex loan products. This move by UWM follows a trend in the mortgage industry towards adopting multiple credit scoring models, with Rocket Mortgage recently announcing its default use of VantageScore 4.0. UWM also stated it will now obtain both FICO and VantageScore 4.0 for each credit pull, utilizing the strongest score for borrower qualification.
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