Beginning in the fourth quarter of 2025, a VantageScore 4.0 credit score will be required for use for all mortgage loans funded by either Fannie Mae or Freddie Mac, which account for the majority of mortgages originated in the United States.

As we’ve seen in the past, poor underwriting and outdated credit scoring models can lead to disastrous outcomes, which are in part to blame for the mortgage crisis and the Great Recession of 2007-2009. For this reason, VantageScore is committed to providing best-in-class risk assessments and predictive performance data points for its VantageScore 4.0 credit scoring model.

VantageScore’s 2023 Model Assessment, which provides an in-depth look at model performance, is available here. The assessment highlights that VantageScore 4.0 continues to outperform previous versions and other benchmark credit scoring models in the mortgage market.

Here are the key highlights of VantageScore 4.0’s performance:

1. Superior Predictive Power: VantageScore 4.0 has shown improved predictive accuracy in both originations and account management across all major product categories, including mortgages. This enhancement is attributed to the use of trended data, which provides a more comprehensive view of a consumer’s credit behavior over time.
2. Score Consistency: The model maintains high score consistency across different Nationwide Consumer Reporting Agencies (NCRAs) due to its proprietary attribute-leveling process. This consistency ensures that consumers receive the same score, regardless of the credit bureau providing the data.
3. Unbiased Results: VantageScore 4.0 delivers unbiased and consistent scores across different ethnic groups, promoting fairness and greater inclusion. This is crucial for ensuring that all consumers, regardless of background, have equal opportunities to access credit.
4. Inclusion: The model’s inclusive approach allows it to score more consumers than traditional models. This includes those with limited credit histories, thereby expanding access to mortgage credit for underserved populations.
5. Performance Improvements: The use of trended credit data in VantageScore 4.0 has driven significant performance improvements, particularly in the lower and higher-scoring segments. This helps lenders make more informed decisions, ultimately benefiting consumers with better loan terms and increased chances of approval.

Conclusion
VantageScore 4.0’s advancements in predictive power, consistency, fairness, and inclusion make it a robust tool for the mortgage market. By leveraging these strengths, lenders can offer more accurate and equitable lending decisions, fostering a more inclusive and fair financial environment.

To learn more about VantageScore’s entry into the mortgage market, visit our Mortgage page.

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