FHFA VantageScore savings sized up, FICO expands in mortgage

Plans to expand competitive use of VantageScore in the mortgage market could save the industry hundreds of millions of dollars, potentially offsetting concerns about rising credit score costs.

VantageScore estimates that full adoption of its 4.0 version under a "competitive use" scenario could cut more than $600 million in the first 12 months, citing a study by Deep Future Analytics. The study, authored by CEO Joseph Breeden and senior advisor Charles Maner, puts the first-year savings closer to $649 million.

The potential savings follow the Federal Housing Finance Agency's plan to adopt VantageScore 4.0 alongside FICO's advanced 10T score, as part of a legislatively mandated modernization effort.

"This rigorous analysis from Deep Future Analytics confirms that the 2018 Credit Score Competition Act could generate significant mortgage credit score savings," said Tony Hutchinson, executive vice president at VantageScore.

The FHFA, currently conservator and regulator of the government-sponsored enterprises that dominate the conforming mortgage market, did not immediately respond to requests for comment on the study's projections. FICO also could not be reached.

Some trade groups and FHFA Director Bill Pulte have criticized price hikes by FICO and the three credit bureaus behind VantageScore, citing limited competition in credit reporting and scoring. While the FHFA and the Credit Score Competition Act have aimed primarily to encourage competition in scoring, Pulte has expressed interest in expanding choice more broadly. However, some experts remain cautious about potential conflicts if lenders can select which score to use; previous FHFA guidance under former Director Sandra Thompson reportedly ruled out lender choice.

Other savings stats and the study's methodology

VantageScore says the study's projections could reach billions in total savings over several years. Even in conservative adoption scenarios, cumulative benefits are expected to turn positive within the first quarter of competitive use.

Deep Future Analytics modeled three pricing scenarios for 2027–2032, using data from both VantageScore and FICO and combined forecasts for conforming and nonconforming markets from the Mortgage Bankers Association. The study's authors note that these scenarios are meant as a framework for modeling assumptions, not as formal forecasts.

Key assumptions include:

• Competitive use would pressure FICO to lower pricing.
• Standard per-score fees were assumed at $10 for FICO and $4.33 for VantageScore; 10T was assumed at FICO's classic rate.
• Scenarios included unchanged prices, competition-driven adjustments, and FICO price growth of 19% per year.
• Switching costs ranged from $50,000 for small lenders to $1 million for larger players.
• Gradual adoption over multiple years was assumed, without switching unless competitive pricing changes occurred.
• Different lender risk appetites were modeled.
• Calculations accounted for both switching costs and competitive discounts.

How FICO aims to get more borrowers qualified

Separately, FICO announced a mortgage-score simulator for its premier subscribers, allowing borrowers to model how different payment scenarios might affect their home loan readiness. Pricing for the service is roughly $39.95 per month. Free and lower-cost services exist for general credit score and mortgage-readiness information, but they do not simulate payment impacts. FICO plans to update the simulator to include its 10T score, with no effect on users' credit standing.

This consumer-focused simulator differs from an industry tool released earlier this year through resellers, which is aimed at interactions with borrowers at the point of loan origination.