Decision Ushers in a New Era for Predictive Performance and Financial Inclusion
Using VantageScore® for Mortgages
Recently, the Federal Housing Finance Agency (FHFA) approved the use of VantageScore 4.0 for lenders who sell loans to Fannie Mae or Freddie Mac (Government Sponsored Enterprises, or GSEs). This landmark decision enables lenders to take advantage of VantageScore‘s highly predictive and inclusive credit scoring model.
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Countdown to Implementation of VantageScore 4.0 Credit Score
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Latest Implementation Update from GSEs
Based on feedback from the public engagement process, the publication of historical VantageScore ® 4.0 scores has been accelerated and the implementation of the bi-merge option has been aligned with the retirement of Classic FICO.
See the Latest Update from GSE
Proposed Implementation Timeline
Q2 2023
Industry Feedback Window
Q3 2023
Publish Uniform Loan Delivery Dataset (ULDD) specifications to support the updates.
Q3 2024
Publish VantageScore® 4.0 historical credit scores.
TBD
Publish FICO® Score 10 T historical credit scores.
TBD
Lenders deliver VantageScore® 4.0 and FICO® Score 10 T credit scores in addition to Classic FICO credit scores, and GSEs update MBS/CRT disclosures to include VantageScore® 4.0 and FICO® Score 10 T.
Q3 2025
Implement “tri-merge” to “bi-merge” reports (optional) and new credit score calculation (mandatory) and incorporate new credit score model requirements into mortgage processes, while simultaneously retiring Classic FICO.
Note: Milestones related to the implementation of FICO ® Score 10 T are dependent on achieving the necessary conditions for the acquisition and publication of FICO ® Score 10 T historical data.
VantageScore 4.0 Migration Resource Center
The first step in migrating to VantageScore 4.0 is to understand how the model is differentiated from the legacy scoring models that have been used to issue GSE-conforming mortgages.
VantageScore Migration Playbook
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Impact of Requiring VantageScore 4.0
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Mortgage FAQs
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FHFA’s Credit Score Updates
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FHFA's New Ruling
Thanks to a landmark decision by the Federal Housing Finance Agency (FHFA), mortgage lenders that sell loans to either Fannie Mae or Freddie Mac (the GSEs) will be required to use the VantageScore 4.0 model.
FHFA’s decision opens the door to millions more qualified applicants without lowering credit risk standards.
The result of the decision is a mortgage lending industry that serves consumers through the advancement of financial inclusion and supports mortgage lenders seeking to grow their portfolios.
What does it mean for the mortgage industry?
Financial Inclusion Through Homeownership
Growing Lenders Portfolios
Read VantageScore's Full Statement
Why Is the FHFA Announcement Important?
Breakdown of Newly Scoreable Consumers
| Emerging Borrower/ Young File | Young to credit | Consumers who have only credit accounts that are less than six months in age |
|---|---|---|
| Dormant | Infrequent or rare users of credit | Consumers who haven't had an update/reporting on their credit files in the past six months but have had updates more than six months ago |
| No Trades | Have only external collections, public records and inquiries on their file | Consumers who have no credit accounts but are scored based on external collections and public records on their file |
21% of millennials have “thin files," making it difficult for lenders to see them as strong borrowers and leading to more young consumers not able to get the credit they need.
Out of the newly scored Americans, 16% are African-American or Hispanic, highlighting a notable portion of the population.
Approximately 33 million more Americans can be scored by our models
Demographic Breakdown
| Newly Scorable | Scores 620+ | |
|---|---|---|
| Total | 33 Million | 10 Million |
| Black and Hispanic | 10.73 Million | 3 Million |
| Asian / Pacific Islander | 1.4 Million | <1 Million |
| Native American | < 1 Million | < 1 Million |
Why VantageScore
More Potential Customers
VantageScore allows lenders to accurately assess approximately 33 million more consumers than with other commercially available models. More than 10 million of these newly scored consumers have scores of 620 and above, and thus are potentially eligible for mortgages.
Strong Risk Management
VantageScore is at the cutting edge of predictive power thanks in part to its highly sophisticated model architecture and its innovative use of data. The VantageScore 4.0 model features the use of trended credit data and machine learning to drive predictive performance. VantageScore provides more precise decisioning enabling more mortgage application approvals while limiting defaults.
Close The Racial Wealth Gap
Home equity is the lifeblood for building wealth in the U.S. economy. With VantageScore, lenders can reach approximately 4.1 million more minority borrowers with credit scores above 620. By providing mortgage finance opportunities to these historically underserved but creditworthy borrowers, we can begin to address the widening racial wealth gap in America.
More Consumer Friendly
VantageScore has been proud to pioneer the use of rent, telecom, and utility data and the exclusion of paid collection accounts. These consumer-friendly features also help lenders by giving them a more complete and fair picture of their customers’ creditworthiness.
Mortgage Industry Usage
In advance of the GSE's migration to using VantageScore, there are sectors of the mortgage market where VantageScore may currently be used.
Portfolio Management
VantageScore credit scores are effective tools for monitoring the ongoing risk of mortgage portfolios.
Mortgage Backed Security Analysis
The VantageScore model is often used in loan-level valuation analyses for previously issued mortgage-backed securities.
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