What Happens Next?: How Credit Score Competition is Reshaping the Mortgage Market

Highlights: 

• The shift to a competitive credit scoring environment, leveraging alternative data like rental and utility payments, is creating an expanded pool of eligible consumers for homeownership, offering significant growth opportunities for lenders.

• The mortgage industry is prepared for the new scoring model, with the necessary infrastructure in place. This competition is expected to help stabilize rising credit score costs, benefiting both originators and consumers.

In a rapidly evolving mortgage market, the introduction of competition in credit scoring is set to reshape how consumers access homeownership. This shift promises a more inclusive and dynamic landscape, challenging traditional lending practice and one question remains: What happens next? 

In a special edition of the Equifax Market Pulse podcast, recorded at the Mortgage Bankers Association Annual Convention in Las Vegas, Clayton Collins, CEO of HousingWire sat down with Rikard Bandebo, Chief Strategy Officer and Chief Economist at VantageScore, to discuss the evolving landscape of credit scoring in the mortgage market. 

Here are the key takeaways from their discussion:

1. Increased Competition and Innovation

According to Bandebo, the Federal Housing Finance Authority’s announcement in July 2025, allowing Fannie Mae and Freddie Mac to accept VantageScore, marks a significant shift. This introduces much-needed competition and innovation into a system that has remained largely unchanged for over 30 years, ultimately benefiting both the industry and consumers.

2. Expanding Credit Access and Communities

VantageScore 4.0, by utilizing up to 24 months of credit history and incorporating alternative data like rental and utility payments, can accurately score more consumers who were previously excluded by the traditional credit system. This could mean more households could become eligible for a mortgage, and many more could qualify for better pricing, particularly first-time homeowners. 

Many of these newly eligible borrowers are found in rural areas or historically high-rental areas where housing demand has been low. This expansion of credit access could stimulate local economies and foster wealth creation in these communities.

3. Industry Readiness and Future Outlook

The mortgage industry, including large originators, national credit reporting agencies (NCRAs), and resellers (CRAs), is showing a strong appetite for adopting VantageScore. 

While smaller lenders are showing a more mixed response, the competitive advantage of reaching more customers is a strong motivator. The introduction of competition is also expected to help stabilize the rising costs of credit scores, benefiting both originators and consumers. VantageScore has a proven track record in other lending areas, providing a reliable and consistent scoring model across bureaus.

4. Adoption Readiness: The Industry's Implementation Status

The mortgage industry is making positive strides toward the new scoring environment. The three National Credit Reporting Agencies (NCRAs) have successfully put the necessary infrastructure in place to deliver VantageScore 4 data to originators. Many large lenders have already completed their essential due diligence by back-testing the model against their historical data, positioning them for a smooth transition. For smaller lenders, now is an excellent time to begin their own preparation. By adopting the new score, they can fully participate in the expanding market and follow the lead of larger and mission-focused institutions that are actively moving to serve a broader segment of credit-worthy consumers.

For more insights, tune in to the full episode of the Market Pulse podcast to learn What Happens Next.