Latest news with #VantageScore
Axios
2 hours ago
- Business
- Axios
How two new government policies could help make housing more affordable in Nashville
Housing stakeholders in Nashville hope two new policies — one at the federal level and another at the local level — play at least small parts in making homeownership more affordable and accessible. Why it matters: No single policy will magically solve the city's affordability crisis, but every drop in the bucket helps. Experts say the new policies could especially benefit new homeowners. Driving the news: The Federal Housing and Finance Administration announced a new policy allowing lenders to factor in a prospective homebuyer's rent payment history when approving a mortgage application. Up to this point, lenders used the FICO system, which considers a borrower's credit card and loan history when calculating their creditworthiness. Experts say the old system gave FICO a monopoly, and that adding in the new VantageScore credit score option creates competition that should lower fees for borrowers. The big picture: National Realtors Association chief advocacy officer Shannon McGahn applauded the policy shift, saying it "better reflects how today's consumers manage their finances." FHFA director Bill Pulte took a victory lap after the announcement and credited President Trump for the policy change. He says the competition will help homeowners. The policy will take some time to be implemented as FHFA works out administrative details. What she's saying: Christi Wedig, a loan originator with CMG Home Loans, tells Axios the FHFA policy switch should help borrowers like young people and immigrants who haven't taken out a loan or a credit card. "I think it's going to be really helpful across the country, and particularly here in Nashville," she says. "Rent is not cheap here. If you're paying $2,500 to $3,000 a month, you deserve some impact on your credit score." Yes, but: There are also risks since a single missed payment for a utility bill or rent didn't impact a person's credit score in the past. There's also the question of whether a landlord reports successful rent payments to VantageScore, something a local mom and pop landlord may not do. Wedig says it's important renters make sure their payments are verifiable through transaction history such as checks, electronic transfers or Venmo. Renters can register their own payment history through third-party companies to boost their VantageScore rating, although that service typically costs money. Metro approves new multi-family construction rule Zoom in: At the local level, Metro Council passed legislation last week that updates codes regulations to allow a multi-family building to be constructed with a single staircase. The policy applies to buildings up to six stories. Homebuilders say the policy will significantly lower their costs, which should benefit both renters and condo buyers. Between the lines: Advocates, such as Metro Councilmember Rollin Horton, say the single-stair design is cost effective and "just as, or even more safe" for residents. The state passed enabling legislation allowing local governments to implement the new code. Council members collaborated with the Fire Marshal's office, Codes Department and Planning Department to create the policy.
New York Times
3 days ago
- Business
- New York Times
Mortgage Lenders Can Use a Second Credit Score. Is That Good for Borrowers?
Your credit score helps determine if you'll qualify for a loan and what interest rate you'll get. For mortgages, which are often the biggest loans most people will take out, the score can translate to thousands of dollars in savings — or higher costs — over the life of the loan. Mortgage lenders will soon have the choice to use either a traditional FICO score or an updated version from a rival, VantageScore, to evaluate a borrower's creditworthiness, a top housing finance regulator announced this month. The post on X came from William Pulte, director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, two mortgage finance companies that play a crucial role in the market for home loans. (Fannie alone owns or guarantees more than a quarter of all single-family mortgage debt, according to regulatory filings.) Lenders selling loans to Fannie Mae and Freddie Mac are now allowed to use VantageScore, in addition to FICO, to evaluate borrowers, Mr. Pulte declared. Lenders, long used to FICO, are awaiting more details about how the new credit score will be used, and it may take time for them to adopt the new option. But Guy Cecala, the executive chair at Inside Mortgage Finance, an industry publication, said VantageScore could potentially help younger borrowers or others with limited credit histories qualify for home loans or to get better rates, saving them money. VantageScore's formula heavily weighs on-time payments, he said, which can help borrowers who have less of a credit history. VantageScore estimates that five million more prospective buyers could qualify to own a home under the new policy because its model allows a broader swath of people to get credit scores. Want all of The Times? Subscribe.
Wall Street Journal
4 days ago
- Business
- Wall Street Journal
More Data Means Less Mortgage Risk
I could not disagree more strongly with Will Lansing's letter 'A Risky Race to the Bottom on Housing Credit' (July 16). FICO Classic was the only mortgage credit score broadly used during the 2008 crisis. In my view, FICO Classic was a deficient mortgage credit score then and it has become outdated since. Antitrust regulators pursue monopolies for good reason. They can lead to price gouging and low-quality products. Unlike VantageScore, FICO Classic excludes large numbers of creditworthy Americans—especially renters—from mortgages.
Yahoo
5 days ago
- Business
- Yahoo
FICO® Score 10 T Decisively Outperforms VantageScore 4.0 in Mortgage Predictive Accuracy
BOZEMAN, Mont., July 16, 2025--(BUSINESS WIRE)--FICO (NYSE: FICO), global analytics software leader, today released a new white paper revealing that FICO® Score 10 T – the company's most predictive and inclusive credit scoring model to date – overwhelmingly outperforms VantageScore 4.0 in mortgage origination predictive power. The white paper highlights an analysis by an independent third party that found that VantageScore 4.0 generates a minimal predictive improvement over Classic FICO. At the same time, FICO data scientists established that FICO® Score 10 T far exceeds Classic FICO in detecting loan losses. Key findings: FICO® Score 10 T's improvement over Classic FICO was shown to be 5 times better than VantageScore 4.0's improvement, detecting 18% more defaulters where it matters most – in the critical score decile used for mortgage origination – versus just 3.4% for VantageScore 4.0. VantageScore 4.0's improvement over Classic FICO was shown to be so minor that when properly adjusting the comparison due to a truncation anomaly described in our white paper, it should be questioned if VantageScore 4.0 even beats Classic FICO at all. Based on enhanced prediction, use of FICO® Score 10 T rather than VantageScore 4.0 by market participants throughout the mortgage industry will drive significantly more loan approvals for prospective borrowers, and, due to better model performance for mortgage insurers, investors and others, improve mortgage pricing and lower costs for borrowers—benefitting millions of Americans. "I'm proud of my analytics team for developing such a strong credit score for predicting mortgage default," said Ethan Dornhelm, vice president of Scores and Predictive Analytics at FICO. "We were confident that FICO Score 10 T would significantly outperform VantageScore 4.0 in predicting mortgage risk and this analysis shows that conclusively." In addition to its superior predictive accuracy, FICO® Score 10 T stands out for its commitment to fairness and trusted standards. The white paper also highlights that VantageScore attempts to improve the predictive performance of VantageScore 4.0 by including mortgage-specific variables, which penalize people who have never owned a home. Under VantageScore, millions of Americans — including young people, members of military, and people from disadvantaged groups — will have lower scores than they otherwise would, merely because they have never owned a home. FICO Score 10 T includes rental data while not penalizing people for not owning a home. "Just as the mortgage industry begins to embrace rent as a meaningful indicator of credit readiness, VantageScore 4.0 penalizes renters with lower scores," said Jim Wehmann, president of Scores at FICO. "VantageScore's mortgage variables will force lenders to inform disadvantaged groups or members of the military through adverse action notices that they have been rejected for a mortgage because they don't currently own a home. Imagine telling a potential borrower, 'you need a mortgage to get a mortgage.' Not only is that confusing to consumers, it is unfair." Since October 2022, FICO® Score 10 T has been validated and approved by the Federal Housing Finance Agency for use by Fannie Mae and Freddie Mac, enabling its use in the origination of conforming mortgage loans, with implementation of the model ongoing. It's not just FICO data scientists that recognize FICO Score 10 T's decisive performance over VantageScore: early adopters representing over $300 billion in annual mortgage originations and $1.5 trillion in mortgage servicing portfolios have adopted and started trading loans with FICO Score 10 T. Learn more about the study and download the executive summary and full white paper by visiting: About FICO FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 80 countries do everything from protecting 4 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by 90% of top US lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency. Learn more at View source version on Contacts press@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
5 days ago
- Business
- Forbes
Buy, Sell, or Hold Fair Isaac Stock?
CHONGQING, CHINA - APRIL 23: In this photo illustration, the logo of Fair Isaac Corporation (FICO) ... More is displayed on a smartphone screen, with the company's latest stock price performance and candlestick chart visible in the background, on April 23, 2025, in Chongqing, China. (Photo illustration by) Fair Isaac (NYSE:FICO) shares fell by almost 17% in the last week, following a significant regulatory announcement. The decline was sparked when the Federal Housing Finance Agency (FHFA) revealed that Fannie Mae and Freddie Mac will now recognize VantageScore 4.0 along with traditional FICO scores for mortgage underwriting. This breaks FICO's long-held monopoly, as these two government-sponsored entities support approximately half of all U.S. mortgages. This action is perceived as a possible challenge to FICO's market dominance and its forthcoming pricing power in the credit scoring sector. So, is this actually a long-term danger for FICO stock, or is the market reaction excessive? Although Vantage Score has received approval, it is anticipated that most lenders will keep using FICO scores due to their established trust, data models, and seamless integration with current underwriting frameworks. Mortgage lending is highly sensitive to risk, and lenders are expected to be hesitant about making an immediate change to a newer model. Furthermore, the existing use of tri-merge credit reports – which aggregate information from all three major credit bureaus: Experian, Equifax, and TransUnion – continues to depend on FICO scores. This should aid in maintaining demand for FICO's scoring products. On a separate note, cryptocurrencies have begun to show movement again. See – Will The Rally In XRP Price Continue? Does the Decline Render FICO Stock Worth Buying? Based on the amount you pay for each dollar of sales or profit, FICO stock still appears to be pricey when compared to the wider market. Fair Isaac has a price-to-sales (P/S) ratio of 21.8x compared to a figure of 3.1x for the S&P 500. Additionally, it has a price-to-earnings (P/E) ratio of 71x versus the benchmark's 26.9x. Nevertheless, our evaluation of Fair Isaac across key aspects of Growth, Profitability, Financial Stability, and Downturn Resilience indicates that the company shows robust operational performance and financial health, as described below. That said, if you're looking for potential gains with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative – having surpassed the S&P 500 and achieving returns over 91% since its inception. Fair Isaac's Revenues have experienced significant growth in recent years, with its top-line expanding at an average rate of 10.3% over the past 3 years compared to an increase of 5.5% for the S&P 500. Moreover, its quarterly revenues surged by 15.2% to $440 million in the latest quarter, rising from $382 million a year prior, contrasted with a 4.8% increase for the S&P 500. Fair Isaac's profitability remains outstanding. Over the last four quarters, Fair Isaac's Net Income was $544 million, yielding a net income margin of 30.7%, significantly surpassing the S&P 500 average of 11.6%. This showcases the operational efficiency and pricing authority of its Scores segment. Fair Isaac's balance sheet appears solid, with the company maintaining a Debt-to-Equity Ratio of 6.3% (compared to 19.4% for the S&P 500). Cash and cash equivalents make up $184 million of the $1.7 billion in Total Assets for Fair Isaac. This results in a robust Cash-to-Assets Ratio of 10.8%. FICO stock has shown a performance that was slightly better than the benchmark S&P 500 index during several recent downturns. Not particularly pleased with the still high valuation of FICO stock? The Trefis High Quality (HQ) Portfolio, consisting of 30 stocks, has a history of consistently outperforming the S&P 500 over the past 4-year period. Why is that? Collectively, HQ Portfolio stocks have delivered superior returns with lower risk compared to the benchmark index; providing a smoother ride, as seen in HQ Portfolio performance metrics.
