VantageScore 4.0 is the latest credit scoring model being used by the three major credit bureaus. Data shows it’s a better predictor of mortgage readiness than the traditional FICO score.
National Association of Realtors Chief Economist Lawrence Yun recently stated VantageScore 4.0 is good news for financially responsible renters hoping to buy.
Federal Housing Finance Agency (FHFA) announced this past summer that Fannie Mae and Freddie Mac will begin accepting VantageScore 4.0 for mortgage underwriting. This change hopes to create more qualified borrowers by modernizing credit scoring models in addition to the traditional FICO score.
VantageScore 4.0 includes additional data points—such as rental, utility, and telecom payments—in the credit report, rewarding borrowers for making timely payments. These other data points have traditionally been excluded from credit reports.
NAR has long advocated for the modernization of the credit scoring system, including the use of additional data points, to help borrowers—especially those with limited credit. The change gives potential homebuyers an extra boost that can either qualify them for a mortgage or lower the cost of the loan. This added resource is something that NAR’s Advocacy team has been pushing for and they applaud its roll out.
Yun stated, “The financially responsible renters should get a positive score from using VantageScore 4.0, so in addition to the FICO score, the enlargement of this new credit requirement will lead to more first time buyers coming into the market. Great news for financially responsible people in America.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
