Credit-scoring competition benefits U.S. mortgage market

By: Barrett Burns
Date: June 25, 2020

Dear Colleague,

We remain encouraged by the willingness of the government-sponsored enterprises (GSEs) – Fannie Mae and Freddie Mac – and their regulator, the Federal Housing Finance Agency (FHFA) to consider alternatives to the outdated credit scoring models they currently require in their seller-servicer guidelines.

Along with leading economists, researchers, and consumer advocates, we see it as a matter of basic fairness to embrace scoring technology that expands credit access to quality credit for millions of consumers, without reducing credit standards.

We also see GSE support for competition among credit scoring models as a matter of basic fairness. Lenders should have the freedom to choose the validated scoring model that works best for their specific needs.

Different lenders, who serve different regions and populations, and pursue different lending and risk-management strategies, will experience different performance benefits from various credit scoring models. They should be free to choose the model(s) that work best for their particular circumstances.

A hallmark of our free market system is the role of competition in encouraging all players to improve their game. In the short time VantageScore Solutions has been competing in the credit scoring marketplace, we’ve led the way in advances such as recognition of positive rental and utility payments that appear in consumer credit files and elimination of paid collection accounts. These practices may soon become industry standards, and competition fueled their adoption.

Our mission is not to become the only credit scoring model available to mortgage originators. It is to open up the market and to revise GSE guidelines to give lenders choice.

We’re proud of the competitive strides we’ve made and will continue to make, and we urge the GSEs to recognize the importance of competition as they consider revisions to their outdated credit scoring requirements.

All the best,

Barrett Burns