Key facts
- Equifax will continue offering its VantageScore 4.0 at a $1 price point through the end of 2027.
- The company aims to drive adoption of VantageScore by mortgage lenders.
- The Federal Housing Finance Agency (FHFA) activated VantageScore 4.0 for over 100 mortgage lenders in April.
- VantageScore mortgage volume nearly tripled in the second quarter to 2.2 million transactions.
- Equifax estimates a potential $1 billion annual cost savings opportunity for lenders by shifting from FICO scores.
Equifax has announced it will maintain its $1 pricing for its VantageScore 4.0 credit scoring model through the end of 2027. This strategic decision aims to accelerate the adoption of the alternative credit scoring system among mortgage lenders.
The initiative, initially launched in March, also includes offering free VantageScore 4.0 credit scores to customers who purchase FICO scores across mortgage, automotive, card, and consumer finance sectors.
In April, the Federal Housing Finance Agency (FHFA) enabled the use of VantageScore 4.0 for more than 100 mortgage lenders, with the U.S. Department of Housing and Urban Development (HUD) indicating future support for the model.
Equifax CEO Mark Begor stated that while most of these lenders have started using VantageScore, an additional 1,200 mortgage lenders are pulling the free VantageScore alongside a paid FICO score. In the second quarter, VantageScore mortgage volume surged to 2.2 million transactions, nearly tripling from the previous quarter, primarily driven by this larger group of lenders.
Furthermore, approximately 100 mortgage lenders have transitioned to using VantageScore exclusively for their originations, predominantly smaller, non-government-sponsored enterprise originators and those focused on HELOCs and home equity loans. Although volumes for these exclusive users were low at around 10,000 transactions in the quarter, Begor noted significant acceleration towards the end of the period.
Begor emphasized that Equifax generates no profit from FICO mortgage scores, which constitute about 50% of its U.S. Information Solutions mortgage revenue and roughly 7% of total Equifax revenue. In contrast, VantageScore is jointly owned by Equifax, Experian, and TransUnion. Equifax is promoting its $1 VantageScore as a cost-saving measure, citing a potential $1 billion annual savings opportunity for originators and consumers by shifting volume from FICO. Begor also highlighted that lenders are increasingly focusing on the underlying credit data used to generate scores, rather than solely on score choice.