Military service members often face challenges accessing credit during or after deployments. This happens because many traditional credit models exclude consumers who have been credit dormant for six months. This makes it difficult for both recently discharged and active-duty service members to obtain a credit score. VantageScore 4.0 eliminates the requirement for recent credit activity in the past six months. It also integrates rental payments and other consumer credit data into its scoring model, making it more inclusive than conventional models.
"Outdated credit scoring models unfairly exclude many veterans from fair pricing in the financial marketplace," said Tony Hutchinson, SVP of Industry and Government Relations at VantageScore. "VantageScore enables more veterans and active-duty military to access the financial products they need, including home loans."
VA direct and VA-backed Veterans home loans offer favorable terms for buying, building, improving, or refinancing homes, contingent upon a credit score. Historically, outdated credit models excluded millions of eligible borrowers. VantageScore 4.0 scores approximately 33 million more individuals who may now gain access to credit scores, fostering homeownership potential.
With the economy poised for improvement and interest rates expected to decline in the coming months and into 2025, transitioning to the VantageScore 4.0 credit scoring model now will position lenders to take advantage of opportunities in the mortgage marketplace instead of missing out on them. By implementing VantageScore 4.0, lenders could originate as many as 2.7 million new mortgages or up to $1 trillion in new high-quality mortgage loans. This opportunity, along with VantageScore 4.0's proven predictive power, has drawn interest and support from many prominent lending institutions.
"BMO Bank is a purpose-driven organization that is focused on leveling the playing field in underserved communities and creating the conditions for inclusive economic growth," said Mark Shulman, Head of Consumer Lending, BMO Bank. "VantageScore has provided us with the opportunity to provide fair and accurate credit scores to a broader population, and we look forward to leveraging VantageScore for mortgage lending in the future to help further close the housing gap."
For more information on VantageScore 4.0 implementation, please visit VantageScore's Mortgage landing page.
About VantageScore®
VantageScore is the fastest-growing credit scoring company in the U.S. and is known for the industry's most innovative, predictive, and inclusive credit score models. In 2023, usage of VantageScore increased by 42% to more than 27 billion credit scores. More than 3,400 institutions, including 8 of the top 10 banks, use VantageScore credit scores to provide consumer credit products including credit cards, auto loans, personal loans and mortgages. The VantageScore 4.0 credit scoring model scores 33 million more people than traditional models. With the FHFA mandating the use of VantageScore 4.0 for Fannie Mae and Freddie Mac guaranteed mortgages, the company is also ushering in a new era for mortgage lending and helping to close the homeownership gap.
VantageScore is an independently managed joint venture company of the three Nationwide Consumer Reporting Agencies (NCRAs) – Equifax, Experian, and TransUnion.
SOURCE VantageScore
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