VantageScore Approved for Mortgage Applications
Using VantageScore® for Mortgages
Recently, the Federal Housing Finance Agency (FHFA) approved the use of VantageScore 4.0 for lenders who sell loans to Fannie Mae or Freddie Mac (Government Sponsored Enterprises, or GSEs). This landmark decision enables lenders to take advantage of VantageScore‘s highly predictive and inclusive credit scoring model.
Countdown to Implementation of VantageScore 4.0 Credit Score
Latest Implementation Update from GSEs
Based on feedback from the public engagement process, the publication of historical VantageScore ® 4.0 scores has been accelerated and the implementation of the bi-merge option has been aligned with the retirement of Classic FICO.
Proposed Implementation Timeline
VantageScore 4.0 Migration Resource Center
FHFA's New Ruling
Thanks to a landmark decision by the Federal Housing Finance Agency (FHFA), mortgage lenders that sell loans to either Fannie Mae or Freddie Mac (the GSEs) will be required to use the VantageScore 4.0 model.
FHFA’s decision opens the door to millions more qualified applicants without lowering credit risk standards.
The result of the decision is a mortgage lending industry that serves consumers through the advancement of financial inclusion and supports mortgage lenders seeking to grow their portfolios.
What does it mean for the mortgage industry?
- Millions More Borrowers
- Financial Inclusion Through Homeownership
- Growing Lenders Portfolios
Why Is the FHFA Announcement Important?
Emerging Borrower/ Young File | Young to credit | Consumers who have only credit accounts that are less than six months in age |
---|---|---|
Dormant | Infrequent or rare users of credit | Consumers who haven't had an update/reporting on their credit files in the past six months but have had updates more than six months ago |
No Trades | Have only external collections, public records and inquiries on their file | Consumers who have no credit accounts but are scored based on external collections and public records on their file |
Newly Scorable | Scores 620+ | |
---|---|---|
Total | 33 Million | 10 Million |
Black and Hispanic | 10.73 Million | 3 Million |
Asian / Pacific Islander | 1.4 Million | <1 Million |
Native American | < 1 Million | < 1 Million |
Why VantageScore
Mortgage Industry Usage
- Portfolio Management
VantageScore credit scores are effective tools for monitoring the ongoing risk of mortgage portfolios.
- Mortgage Backed Security Analysis
The VantageScore model is often used in loan-level valuation analyses for previously issued mortgage-backed securities.