Lenders skeptical as VantageScore shifts mortgage credit rules
The model’s core distinction is one of time. “Theoretically, it will create more access to borrowing because the algorithms that are used in the VantageScore model allow you to get a score with just one month of credit history, as opposed to FICO requiring 12 months of credit history. Supposedly, the scoring models for VantageScore could produce higher scores for individuals.”
Co-owned by Equifax, Experian, and TransUnion, VantageScore 4.0 has already captured more than 9% of Fannie Mae and Freddie Mac mortgage securitizations since FHFA allowed a limited rollout beginning in May, according to VantageScore Solutions.
The average consumer VantageScore 4.0 credit score climbed to a 12-month high of 702 in June, according to VantageScore’s CreditGauge index, signaling broader eligibility could bring more borrowers into range.
Lender skepticism and the FICO loyalty problem
Despite momentum from early adopters, the broader market has been slow to follow.
“Many lenders are skeptical about the difference between the FICO scoring and the VantageScore, as to whether it will be better, and if it’ll really do anything to improve lending. You don’t work with one credit model for decades and then adopt a new one right away. You’re going to be met with skepticism,” Cohn said.
