The Federal Housing Finance Agency (FHFA) has made a data set of historical VantageScore 4.0 credit scores available to approved mortgage industry participants, a big step in the transition to updated credit score and credit report requirements at Fannie Mae and Freddie Mac.
The FHFA in October 2022 approved two new credit score models, FICO 10T and VantageScore 4.0, for use by Fannie and Freddie, replacing the Classic FICO model that the government-sponsored enterprises (GSEs) have used for roughly two decades. The incoming models are touted to be more predictive and inclusive than traditional credit scores: A statement from VantageScore, for example, says that VantageScore 4.0 scores “an estimated incremental 30 million people than traditional models.”
The release of the historical data set, according to the FHFA, is aimed at smoothing market stakeholders’ transition by allowing them to better analyze the new credit score models firsthand. The data set includes historical credit scores associated with single-family loans purchased by Fannie and Freddie from April 2013 through March 2023, reflecting the period for which trended consumer credit data is “reliably available across the three nationwide consumer reporting agencies,” according to the FHFA.
Specifically, the loan-level data includes some 25 million records for Fannie and 20 million records for Freddie; additionally, the data set includes mortgage-backed securities and credit risk transfer information for another 38 million records for Fannie and 33 million records for Freddie.
“The release of historical credit scores on tens of millions of loans provides an extensive resource to help market participants prepare for this transition,” said FHFA Director Sandra L. Thompson. “The use of these modernized credit score models will enhance risk management while furthering sustainable access to credit for consumers.”
Anthony Hutchinson, senior vice president, industry and government relations at VantageScore, praised the release and the transition to the new score models in a statement.
“VantageScore applauds the FHFA and the GSEs in their commitment to implement VantageScore 4.0 in order to provide the mortgage industry with the most innovative, predictive and inclusive credit scores,” he said. “This is an important and necessary step to modernize the outdated and exclusionary credit scores that some mortgage lenders have sometimes been forced to rely upon in the past.”
The transition, however, has already seen its share of industry concerns. Recently, five industry groups doubled down on their apprehensions by co-signing a letter to the FHFA; foremost about their worries was that the timeframe of the data included in the release might be too limited to be useful.
“Our members continue to believe that it is imperative to have credit reporting data ‘through the cycle’ back to 2003 given the sensitivity of mortgage default and prepayment to origination credit scores,” that letter said. The groups also expressed concern that the data set doesn’t come with Classic FICO scores for comparison.
Despite the pushback, it appears that the FHFA decided to move ahead with the release without altering the data’s original timeframe. The data is available on the GSEs’ websites (here for Fannie Mae and here for Freddie Mac).
