Mortgage securitization proves FICO Score 10 T’s ability to improve loan options for borrowers and provide better predictive power for lenders

HIGHLIGHTS:

• Cardinal Financial (Cardinal) originated its first VA loans decisioned with the help of FICO® Score 10 T following early adoption of FICO’s newest and most predictive credit score.
• Cardinal formed and traded the first government-issued mortgage-backed security (MBS) pool featuring loans powered by FICO® Score 10 T on November 25.
• The first MBS pool featuring FICO® Score 10 T loans was traded to a primary dealer.
• FICO® Score 10 T helped enable Cardinal to extend more favorable loan terms for military and active-duty borrowers whose loans are held in this pool.

Global analytics software leader FICO (NYSE: FICO) today announced a significant milestone in housing finance: the launch of the first ever government-issued mortgage-backed security (MBS) with loans decisioned using FICO® Score 10 T. This historic MBS pool, issued by Cardinal Financial (Cardinal), included VA loans assessed through FICO’s most innovative scoring model, setting a new precedent for smarter lending decisions and increased borrower inclusion.

FICO® Score 10 T incorporates trended data to provide lenders with a more comprehensive understanding of credit behavior over time, enabling more accurate risk assessments while expanding opportunities for borrowers, including veterans and active-duty military personnel. FICO collaborated with the U.S. Veterans Administration (VA) to confirm acceptance of FICO Score 10 T ahead of the widespread transition as required by the Federal Housing Finance Agency.

Cardinal was one of the first lenders to adopt FICO Score 10 T for its non-G3SE loans and began utilizing this more predictive credit scoring model to originate VA loans in October 2024. With the use of FICO Score 10 T, Cardinal reports that the majority of borrowers received higher credit scores, allowing more favorable loan terms to be offered with no observable increase in credit risk to the lender.

Cardinal’s pool was traded to a primary dealer on November 25. The issuance is not only expected to enhance liquidity for future loans decisioned with the help of FICO® Score 10 T, but also further expand the use of FICO’s newest credit score within the secondary market.

“Today’s announcement underscores Cardinal’s role as a leader in rethinking how we measure and manage credit risk,” said Michael Gaines, senior vice president of Capital Markets at Cardinal Financial. “By leveraging FICO Score 10 T, we’re not only improving credit risk transparency for investors but also expanding homeownership opportunities for veteran and military borrowers.”

More than 21 mortgage lenders nationwide have proactively adopted FICO® Score 10 T for non-GSE loans. FICO is committed to assisting mortgage industry participants looking to transition to its most predictive scoring model. The FICO Score Migration Resource Center provides a detailed guide to support organizations through their score transition with key planning steps, activities, and implementation best practices.

“We are thrilled to see FICO Score 10 T at the heart of this milestone security,” said Joe Zeibert, vice president of Mortgage and Capital Markets at FICO. “By helping to enable smarter, more precise lending decisions, FICO is driving innovation that supports both financial institutions and the communities they serve. We encourage mortgage investors to consider the advantages of incorporating FICO Score 10 T into their models.”

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 U.S. 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 80 countries do everything from protecting four billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by 90% of top U.S. lenders, is the standard measure of consumer credit risk in the U.S. and has been made available in over 40 other countries, improving risk management, credit access and transparency.

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About Cardinal Financial

Cardinal Financial is a dynamic, forward-thinking mortgage organization committed to designing an exceptional experience and tailored home financing solutions for borrowers. Licensed to sell directly through Fannie Mae, Freddie Mac, and Ginnie Mae, the firm operates in all 50 states, offering a wide range of lending options to help more people achieve homeownership. Cardinal Financial's innovative approach is powered by Octane®, their custom-built loan origination platform, designed to streamline the lending process from start to finish. Visit CardinalFinancial.com for more information.

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FICO today announced a significant milestone in housing finance: the launch of the first ever government-issued mortgage-backed security (MBS) with loans decisioned using FICO® Score 10 T.