Toward broader access to homeownership for all
Since our launch a decade ago, VantageScore Solutions has been committed to expanding access to mainstream loans for creditworthy consumers—especially those who cannot receive credit scores when competing credit scoring models are used.
What we didn’t fully appreciate at the outset was how much those efforts would support another mission to which we’ve become equally dedicated—helping diversify the ranks of American homeowners so that they better reflect our country’s ethnic richness.
VantageScore began with a belief that scoring models could be made more inclusive without sacrificing accurate default-risk predictiveness. Our data scientists have confirmed this belief after much rigorous statistical analysis. Using newer, mathematically validated techniques, they designed our models to make better use of consumer credit-file information, including newly introduced granular data and rental- and utility-payment histories. We also optimized VantageScore models to accurately score more “thin-file” consumers—newcomers to the credit market or those who use credit infrequently.
VantageScore’s commitment to score more consumers took a huge leap forward with the introduction of the VantageScore 3.0 model, which scores 30-35 million consumers who are invisible to competing models. After the VantageScore 3.0 model was completed, our analysts took a look at who those previously unscoreable consumers were, and learned that a significant portion of them come from ethnically diverse populations. Recognition of our ability to effectively score more diverse grous of consumers has helped VantageScore cement strong, supportive relationships with a number of homeownership-advocacy groups, including the National Association of Hispanic Real Estate Professionals (NAHREP), the National Bankers Association (NBA), and the Asian Real Estate Association of America (AREAA).
We at VantageScore were pleased to see that the theme of broader access to homeownership and the need to update credit-scoring policies were both included in the platform unveiled at the recent Democratic National Convention:
We must make sure that everyone has a fair shot at homeownership. We will keep the housing market robust and inclusive by supporting more first-time homebuyers and putting more Americans into the financial position to become sustainable homeowners; preserving the 30-year fixed rate mortgage; modernizing credit scoring; clarifying lending rules; expanding access to housing counseling; defending and strengthening the Fair Housing Act; and ensuring that regulators have the clear direction, resources, and authority to enforce those rules effectively. We will prevent predatory lending by defending the Consumer Financial Protection Bureau (CFPB). These steps are especially important because over the next decade most new households will be formed by families in communities of color, which typically have less generational wealth and fewer resources to put towards a down payment.
Expanding homeownership access without compromising credit standards is also a central theme of a recent opinion article in Mortgage Banking magazine that I co-authored with Mark Fleming, chief economist at First American Financial Corp.
Regardless of political leanings, we believe that this is a cause we all can get behind.