The Federal Housing Finance Agency’s (FHFA’s) validation and approval of VantageScore 4.0 ushers in a new era for the mortgage origination market by creating competition, improving predictive performance and expanding financial inclusion.
Implementing VantageScore means that lenders now have the opportunity to provide financial inclusion to borrowers that legacy scoring models ignore. We estimate approximately 4 million minority borrowers with credit scores of 620 and above are newly scored by VantageScore’s credit score model.
HOW THIS DECISION IMPACTS CONSUMERS
PROVIDES GREATER OPPORTUNITY: “Owning a home remains one of the most important ways American’s build wealth and financial security. FHFA’s actions will enable millions more creditworthy borrowers to have access to mortgages by using VantageScore’s more predictive score,” said Silvio Tavares, President and CEO of VantageScore.
VantageScore’s credit score model provides a score to millions of creditworthy consumers that competitive models ignore including 10.7 million who have scores that may qualify them for a mortgage. Among these consumers are approximately 4 million minority borrowers.
By scoring these consumers, usage of VantageScore credit scores helps consumers gain better access to mainstream credit products and potentially qualify for a mortgage.
HOW THIS DECISION IMPACTS LENDERS
DRIVES INCLUSION: By being able to leverage VantageScore 4.0. lenders will have an opportunity to provide financial inclusion to borrowers that competitive scoring models ignore. By growing portfolios safely and soundly, and selling these loans into the secondary market, lenders are expanding their businesses, supporting the economy, and helping consumers buy the homes of their dreams.
For mortgage companies and lenders who want to convert to VantageScore now, they can get started here.
HOW THIS DECISION IMPACTS HOUSING POLICY
CONTRIBUTES TO ACHIEVEMENT OF THE AMERICAN DREAM: Led by a bipartisan movement that included members of Congress, consumer advocates, industry trade associations and thought leaders, the decision to approve VantageScore in the mortgage industry means more consumers across the country may achieve the American Dream of homeownership.
To understand how many consumers are positively impacted, click here to see a map of the United States. In some regions of the country, as many as 1 in 3 consumers lack a credit score from legacy providers.
HOW THIS DECISION IMPACTS CAPITAL MARKETS
INCREASES TRANSPARENCY & ESG: Users of VantageScore credit scores are able to demonstrate social impact by extending credit to creditworthy consumers that have been historically underserved. Securitizations that use VantageScore credit scores are recognized for high levels of accuracy and transparency combined with inclusivity. Pools of loans originated with VantageScore credit scores feature:
Coverage of underserved and mainstream consumers
- Loan-level access
- Comparable performance
- Ratings agency recognition