RESOLVED: To expand access to credit in 2015
On behalf of all of us at VantageScore Solutions, here’s to a great year in 2015, full of growth and prosperity.
New years is the time for new resolve, and I’m pleased to be able to report firsthand that federal officials are approaching 2015 with a strong will to improve a crucial sector of our national economy, the housing market.
In late December, I was privileged to attend a special dinner, convened by U.S. Treasury Secretary Jacob Lew, focused on finding solutions to the mortgage-credit accessibility problem. I was one of nine in attendance, along with other CEOs, a number of distinguished housing advocates, economists, and academics.
I used my opportunity to speak at the dinner to articulate how the GSEs, Fannie Mae and Freddie Mac, are constraining the availability of consumer credit with rules that require the use of outdated 2004 credit scoring models to evaluate borrowers. The VantageScore 3.0 model can provide scores for 30-35 million more consumers than those outdated models. Breaking this “lockout” and implementing VantageScore 3.0 could extend access to the housing market to millions of consumers, at least as far as credit score eligibility is concerned. Among those conventionally unscoreable consumers, 10 million are attractive loan candidates, with scores of 600 and above on the VantageScore 3.0 scale range of 300-850.
The New York Times, in an article about the dinner and the Administration’s focus on revitalizing the housing sector, quoted me about how millions are excluded from mortgage credit because of their scores.
My comments in the Treasury dinner focused on the need for choice and competition among credit scoring model developers in the mortgage origination market, but the message of universe expansion is relevant to all lenders across the key consumer credit industries.
The basis for the solution I outlined at the dinner can be found in a white paper we published last year demonstrating the dramatic universe expansion opportunity that comes with lender adoption of the VantageScore 3.0 credit scoring model.
We at VantageScore Solutions are committed to working with the GSEs and their regulator, the FHFA, to gain acceptance. We believe competition among model providers is what’s best for lenders, for consumers, and for the country.
Have a great 2015.
All the best,
Barrett Burns is president and CEO of VantageScore Solutions, LLC.