00:00 Speaker A
The Federal Housing Finance Agency will allow applicants to use a VantageScore credit score for mortgages sold to Fannie Mae and Freddie Mac. That decision the aim is to increase competition in the credit score market and expand access to mortgages. Joining me to discuss what this news means for would be home buyers is Silvio Tavares, VantageScore CEO and president. Obviously, it’s good news for you guys, Silvio. So, um, congratulations to you on this front. Um, but this is a big change. The the so-called FICO score has been sort of the benchmark within the mortgage market for a long time. So how is what vantage how Vantage score scores folks different from the that traditional method?
01:39 Silvio Tavares
Well, thank you, Julie, and great to be on with you. The simple answer to your question is Vantage score includes many more consumers, about 33 million more consumers, and about a third of that group are actually going to have a Vantage score 620 or and above, which means that many more consumers for the first time are going to have the opportunity to have a Fannie or Freddie Mac backed mortgage. It’s a huge, huge change. It’s going to include more people that have been, uh, left behind, and it’s a benefit not just for competition, but also for many American home buyers who are going to get their first chance to own a home.
02:50 Speaker A
Silvio, there are always a lot of tips that people like to offer how to boost your credit score. If they’re looking specifically through the Vantage score lens, how would they go about doing that?
03:15 Silvio Tavares
Well, one of the big differences with Vantage score, one of the reasons why it’s more modern and why the FHFA has has approved it, and we thank director Polti for making this decisive decision yesterday. One of the things that’s different about us is we include alternative data. If you ask the average American, hey, if I pay my rent on time for 10 years, does that boost my credit score? Most consumers would think the answer is yes, but for our competitor score, the answer is no. For Vantage score, we include that rental data. Um, it’s obvious that that actually is a big indicator of credit worthiness. And, um, as a result, many consumers are going to have a higher Vantage score and actually have a credit score for the first time, um, by use doing things like reporting their rental data, um, to their credit score. We’re the only major national score that does that. We were the first to do it. We also use very, um, an innovative new analytics techniques and we’re the first credit score, um, to, uh, to do that. So that’s really what’s behind the FHFA’s decision. It’s a big, big move for the industry and a big positive move in the right direction at a time when quite frankly, it’s very difficult to buy a home.
05:23 Speaker A
Um, indeed, it is because of uh, where we see interest rates and the affordability crisis of you. So, put some numbers on it for me. How many, uh, people overall and maybe underbanked people specifically may be in a position to become home, uh, home buyers as a result of this?
06:00 Silvio Tavares
Well, we estimate that of the 33 million, um, in total that Vantage score provides a credit score that don’t have a credit score with our competitor, approximately 4.9 million of that group would be mortgage eligibleable. Uh, these are consumers with a Vantage score of 620 or above. 620 is basically the minimum, uh, number, uh, that you need to qualify for a mortgage. And if you think about 1.83, um, adults in the typical household between ages 25 and 65, that adds up to a trillion dollars in incremental mortgages, um, in the United States. So this is a big, big deal. And while we are very pleased about the FHFA’s decision that was, uh, taken pursuant to the 2018 Credit Score Competition Act, we’re very pleased about this for Vantage score and its owners. Really, we’re even more happy for the millions of forgotten Americans that are actually credit worthy and are going to get their first chance at uh, at a mortgage. Owning a home is a really key pathway to economic, uh, prosperity in America. It’s a core part of the American dream, and we are just really excited to be, um, a small contribution to enabling more people to get access to a mortgage and own their first home.
