The Single-Family Mortgage Industry & VantageScore

Open the door to more qualified applicants without lowering credit risk standards or pricing standards

The Single-Family Mortgage Industry & VantageScore

The VantageScore model can uniquely improve a mortgage lender’s business while increasing responsible access to mortgage credit for consumers. By widening the window without lowering the bar in terms of credit risk standards or pricing standards, lenders can reach more qualified applicants.

Specific to the mortgage industry, the VantageScore 4.0 model provides a 2.6% performance improvement in account management and 2.1% lift in originations over a benchmark CRC credit score model. 1

Other features of VantageScore 4.0 that benefit the mortgage market include:

  • More Potential Customers – VantageScore allows lenders to accurately assess approximately 37 million more consumers than with other commercially available models. More than 13 million of these newly scored consumers are Prime or Near-Prime, and thus potentially eligible for mortgages. 2
  • More Consistent Scores – With legacy models, credit scores can vary widely between the three credit bureaus. VantageScore minimizes this variance because the same algorithm is used at all three credit bureaus. VantageScore also uses characteristic leveling, a patented approach that no other model can emulate. It is the most consistent model across all three credit bureaus and the only true tri-bureau model in existence.
  • Strong Risk Management – VantageScore is at the cutting edge of predictive power thanks in part to fresher, more granular data as well as the use of trended credit data and machine learning. No matter where on the credit curve an applicant may fall, VantageScore is a powerful tool to assess credit risk
  • 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 fairer picture of their customers’ creditworthiness.

What the Introduction of Credit Score Competition Means for Mortgage Lending

For many years, Fannie Mae and Freddie Mac, the Government-Sponsored Enterprises (GSEs) responsible for purchasing and securitizing the bulk of mortgages in the U.S., have been required to rely solely on one brand of now antiquated credit scoring models.

Credit score competition is coming to the mortgage industry

Thanks to new federal law and recent rulings by the Federal Housing Finance Administration (FHFA), we now have the potential to expand sustainable homeownership opportunities to millions of additional Americans who are currently disadvantaged by traditional credit scoring models.

How Competition Will Affect the Mortgage Market

The way we use credit has changed, but traditional credit scoring models have not adapted to these shifting behaviors.

Model competition will result in more accurate, reliable, inclusive and updated mortgage credit scores.

With credit score competition:

  • Millions more creditworthy consumers may be eligible for mortgages.
  • Potential first-time homeowners will be more fairly assessed.

Why Competition Is Important

VantageScore and other credit score model developers may now have an opportunity to bring more predictive and inclusive credit scores to the mortgage marketplace.

Mortgage Industry Usage

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 Securities (MBS) Analysis – The VantageScore model is often used in loan-level valuation analyses for previously issued mortgage-backed securities.

Read our latest resource on financial inclusion

CLICK HERE to view a fact sheet that breaks down the newly scoreable consumer population by demography and geography.

Learn More

See all the performance data and insights on VantageScore’s advantage in the mortgage industry.

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  • Derived from the <a href="https://vantagescore.com/pdfs/VS_2021PerformanceAssess_Web-FINAL.pdf">2021 Performance Assessment Study</a>
  • Based on a <a href="https://vantagescore.com/education/blog/conventionally-unscoreable-population-grows-to-40-million-consumers">2018 study</a> performed on a nationally representative random sample of 15 million consumers.