Credit Potential Increases Slightly in February Despite Dip in Mortgage Credit Inquiry Volume

Falling inquiry volume points to increased competition for lenders

Earlier this week, CreditXpert released its March 2022 Mortgage Credit Potential Index (MCPI) for February 2022. Click to download full report. This month’s Index gives lenders a deeper understanding of today’s mortgage applicants, their mortgage credit scores and the potential for bettering those scores. The February data revealed a slight drop in overall volume, as expected. Credit pull volumes were down slightly month-over-month in February (-7.4%) and even more when compared to last February’s numbers (-23.8%).

Click to read full press release >>

While volume has decreased, the potential for applicants to better their scores has not. This is especially important in today’s rising rate environment because an applicant’s credit score, more than any other factor, impacts the mortgage rates for which applicants are eligible. Helping applicants better their scores, and subsequently qualify for a better rate improves housing affordability, a major concern in this market. February 2022 data indicate that more mortgage applicants had the potential to better their credit scores by at least one 20-point band, with the index climbing slightly from 71% in January to 72%.

As CreditXpert Vice President of Marketing, Mike Darne put it in the press release: “Given the rising interest rate environment, we’re excited to see that the nearly three quarters of applicants could better their score is holding steady.”

The February 2022 MCPI showed that 54% of the nearly 125,000 inquiries with sub-580 credit scores could potentially qualify for an FHA loan within 30 days. In addition, more than 886,000 of the 1.2 million February inquiries with scores below 760 could better their score by at least one 20-point band, allowing lenders to give them better risk-based pricing and edge out competitors.

MCPI is a monthly study of mid-score mortgage credit inquiries by 20-point bands that serves as an indicator of changes in mortgage demand and reveals affordable housing and other lending opportunities.

The MCPI was designed to help mortgage lenders see how shifts in volume and applicant credit potential might shape their lending operations and reduce credit fallout in an increasingly competitive market. The Index helps lenders craft strategies that will expand their addressable audience and offer more competitive offers for an increasingly savvy consumer.

The March 2022 MCPI is available for download now here >>