Allysia Finley’s editorial is long on faulty logic and hyperbole, but short on facts. The truth is not in dispute: FICO’s credit score was the only credit score used for mortgages during the 2008 Great Recession that led to Fannie Mae and Freddie Mac’s failure and subsequent U.S. conservatorship, costing American taxpayers billions of dollars. In fact, research from the Federal Reserve Bank of St. Louis found FICO scores to be a poor predictor of mortgage defaults prior to the Great Recession.
Competition enables greater choice and better outcomes for markets. That is why in the aftermath of the 2008 crisis, both parties in both houses of Congress voted for the 2018 Credit Score Competition Act that was signed into law by the President. Lenders choose to use VantageScore not because it is an easier score, but because it uses more data and is the superior choice for predicting a consumer’s credit risk.
Many of the nation’s leading lenders, including JPMorganChase and Bank of America, have studied millions of consumer mortgages and compared VantageScore’s results side-by-side with FICO over a decade. They have unanimously found that VantageScore 4.0 is “better.” As a result, mortgage lenders and consumers will likely save nearly $600 million in mortgage credit score fees alone in 2026. Independent third-party analyses from Bank of America, JPMorganChase, Bloomberg Intelligence and a slew of other market participants found VantageScore 4.0 captured up to 13% more incremental defaults than the legacy FICO Classic credit score. Ms. Finley’s conveniently ignores the overwhelming quantitative evidence.
At its core, Ms. Finley’s commentary demonstrates a lack of understanding of how credit scores function. VantageScore was specifically designed to improve mortgage default prediction using additional trended credit data and modern modeling techniques. Said another way, VantageScore uses traditional credit report data and adds significantly more data than competitors to produce a more accurate risk assessment. The model was built to withstand and prevent the next crisis. Calling VantageScore’s credit scoring model “political” because it incorporates rent and utility payment data is misguided. When has less data ever produced more accurate results? Using more relevant, trended, validated data improves risk assessment.
Mortgage credit score competition grounded in superior predictive power strengthens mortgage markets. Clinging to a single, monopolistic, failed legacy credit score is not the right path forward for the American mortgage market, and it is also contrary to the law implemented by the American people.
Silvio Tavares - President and CEO
WSJ Article: VantageScore Predicts Risk Better Than FICO
