VantageScore 5.0 has launched as a tri-bureau credit scoring model, incorporating data from all three major credit bureaus. The new model claims up to 9% better prediction of credit risk compared to prior versions, alongside steadier scores for consumers.
The model uses post-2020 data, which its developers say better reflects recent consumer credit behavior. This could lead to more consistent lending decisions across the housing market, particularly for borrowers with thinner credit files.
Mortgage lenders often rely on credit scores to gauge borrower risk and set interest rates. A more predictive scoring model may shift how loans are priced, potentially lowering costs for some borrowers while raising them for others.
For buyers, steadier scores might reduce the volatility seen when different bureaus report different data. Sellers could benefit from faster, more reliable loan approvals, though the impact on days on market remains unclear.
Counter to these claims, critics note that any new scoring model requires lender adoption and regulatory approval, which could slow its impact on mortgage markets. Additionally, back-testing on past data may not guarantee real-world performance.