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CREDIT RESOURCE

VantageScore Can Help

Expand Homeownership

By VantageScore

WHAT CREDIT SCORE COMPETITION MEANS FOR YOUR purpose credit scoring model in the United States.
MORTGAGE LENDING EXPERIENCE · VantageScore is owned by all three credit reporting
Credit score competition is coming to the mortgage industry but companies—Equifax, Experian and TransUnion—but is
what does this mean for you, your family and friends? It means we independently managed.
now have the power and potential to expand sustainable · VantageScore is highly accurate and scores 40 million
homeownership opportunities to millions of Americans currently more consumers than conventional models. Therefore,
disadvantaged by traditional credit scoring models. more consumers get access to mainstream credit at fair
prices.
How will it affect me?
Model competition will result in more accurate, reliable, inclusive Allowing updated models to be used in the mortgage market will
and updated mortgage credit scores, which means significant help create an environment where companies will keep pushing
benefits for you. one another to build more advanced scoring models that take into
account of the current economy and how people use credit today.
The way consumers use credit has changed, but traditional credit The end result: more accurate credit scores that drive sustainable
scoring models have not adapted to these shifting behaviors, homeownership opportunities and less defaults.
resulting in millions of Americans being penalized and unjustly
denied mortgage loans. Why is it important?
VantageScore and other credit score model developers may now
With credit score competition: have an opportunity to bring more predictive and inclusive credit
· Pricing and interest rates extended by lenders will be scores to the mortgage marketplace.
more accurate and fair.
· Millions more creditworthy consumers may be eligible for
· Approximately 40 million more consumers can be
mortgages. scored using VantageScore than other traditional credit
· Millennials and GenZers will be more fairly assessed. scoring models; 16 percent of whom are of African- or
Hispanic-American descent.
What happened?
In August 2019, the Federal Housing and Finance Administration · VantageScore accounts for shifting consumer
(FHFA), Fannie Mae and Freddie Mac's regulator, issued a new demographics and behaviors, enabling it to score more
rule authorizing Fannie Mae and Freddie Mac to stop using the than 10 million borrowers with a credit score above
current outdated and exclusionary credit score models. (Fannie 620 (often the minimum credit score required for
Mae and Freddie Mac are responsible for facilitating and mortgages) that aren't even visible to the current models
supporting the majority of U.S. mortgage originations.) used for mortgages.
· 21% of Millennials have “thin files,” meaning they have
They now are considering using other more inclusive and less than 3 active credit accounts; something that
accurate credit scoring models when assessing credit risk for traditional models penalize. So Millennials are not
loan candidates. necessarily less creditworthy but less inclined to use
credit, a behavior that is unfairly punished by traditional
models.
VantageScore, which is used for all other loan types, is a potential
alternative under consideration to the current required model
that's now in place. Here are a few facts about VantageScore: The potential is huge – more homeowners (including first-
time home buyers) and more accurate credit scores! It's a
· VantageScore was founded in 2006 on the pursuit of win-win-win for consumers, lenders and the economy.
creating the most inclusive, predictive and consistent all-

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