Not only does VantageScore 4.0 expand credit score access for millions more people, but the model also increases risk stratification across the mortgage lending spectrum, delivering enhanced accuracy in both stressed and stable economic environments.
National Mortgage Professional highlighted VantageScore’s most recent whitepaper, which asserts that VantageScore 4.0 outperforms Classic FICO on several fronts. VantageScore 4.0 identifies 13.3% more defaults across all loan types than Classic FICO and delivers up to 3.8% more predictive lift.
VantageScore 4.0 uses alternative credit-related data such as rent, utilities, and cell phone charges to score limited files and underserved consumers. In doing so, VantageScore says it can expand the Superprime credit tier from 37% to 51%. The whitepaper also shares that 4.0 performs better during macro-economic crisis periods, predicting defaults pre-pandemic by more than 48.5% and flagging 11.1% more high-risk loans entering the pandemic period.
Furthermore, VantageScore 4.0 has a 0.5% greater predictive lift than Classic FICO and captures 7.5% more defaults. At a 620 credit score, 4.0 has a 6.5% lower default rate, “thereby reducing risk while expanding access.”
Several studies, including one from Bank of America Securities and another by JPMorganChase, have concluded that VantageScore 4.0 is a more predictive credit score for mortgages than FICO Classic.
Download VantageScore’s recent mortgage whitepaper here: https://vantagescore.com/resources/knowledge-center/vantagescore-4-0-predicts-more-mortgage-defaults-than-classic-fico-49-percent-more-pandemic-era-defaults-detected.
