Key facts
- Rocket Mortgage will use VantageScore 4.0 as its default credit model for eligible loans starting in Q4.
- The model will be used for loans delivered to Fannie Mae, Freddie Mac, and VA home loans.
- Testing showed VantageScore 4.0 helped some additional borrowers qualify for mortgages.
- Borrowers who saved money using VantageScore 4.0 saved an average of $1,600 at closing.
- VantageScore 4.0 evaluates changes in credit behavior over time and can incorporate rent and utility payments.
- Rocket Pro will continue to offer both VantageScore and FICO to brokers.
Rocket Mortgage announced on Monday that it will become the first mortgage lender to adopt VantageScore 4.0 as its preferred credit scoring model for all eligible loans, beginning in the fourth quarter. This transition includes mortgages delivered to Fannie Mae and Freddie Mac, as well as VA home loans.
The company conducted a four-month test involving 1.4 million credit reports using both VantageScore and FICO. Rocket Mortgage stated that this testing revealed VantageScore 4.0 enabled some additional borrowers to qualify for mortgages and, in certain cases, secure better pricing. Borrowers who benefited from using VantageScore 4.0 saved an average of $1,600 at closing.
Jay Bray, CEO of Rocket Mortgage, commented that the mortgage industry has long relied on a single credit scoring model and that their analysis showed VantageScore 4.0 helps more qualified clients. VantageScore 4.0 is designed to assess evolving consumer credit behavior, including payment and balance patterns, and can incorporate rent and utility payment data if available in a credit file. This feature may allow borrowers with limited credit histories to obtain a score and potentially qualify for a mortgage.
The new model will apply to Rocket Mortgage's direct-to-consumer loan products that currently permit VantageScore. However, investment property and second-home mortgages, home equity loans, FHA loans, jumbo loans, and some other products will continue to use FICO scores. Rocket Pro, the division serving mortgage brokers, will maintain its offering of both VantageScore and FICO, providing brokers with a choice of scoring models.
This move aligns with the Federal Housing Finance Agency's encouragement for the use of multiple credit scoring models in the mortgage market. The FHFA has been working to integrate VantageScore 4.0 into the process for loans sold to Fannie Mae and Freddie Mac. Credit scores are one component of mortgage underwriting, alongside factors such as income, debt, assets, and property details.