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Market Pulse is a monthly podcast by Equifax, in partnership with Moody’s Analytics. Equifax hosts bring you interviews with industry experts on the latest economic and credit insights that can help drive better business decisions. Whether you’re in financial, mortgage, auto or another service industry, we help make sense of the latest economic conditions that impact you. This podcast series supplements our Market Pulse webinars, which occur on the first Thursday of each month.
Welcome to a special edition
of Market Pulse from Equifax,
where we break down what's shaping the
mortgage industry today and what happens
next.
Hi, I am Clayton Collins,
CEO of HousingWire,
and we're here at MBA
annual 2025 in Las Vegas,
Nevada at the Equifax Podcast
booth here in the Expo hall.
And I'm joined by Rikard Bandebo,
the Chief Strategy Officer,
and Chief Economist at VantageScore.
Rikard, thanks for joining me.
I'm delighted to be here,
Clayton. Alright, credit scoring.
Credit reporting incredibly active
and important topics in 2025
in July of this year,
FHFA director Bill Pulte
made an announcement that
Fannie Mae and Freddie Mac
will begin accepting Vantage score.
Tell us about what the last several
months have meant for you since that
announcement. I mean, it's been
very, very positive for us. You know,
we are big fans of competition and
innovation in the, in the mortgage space.
We think it's going to be really,
really good for the industry and for
consumers. And it's good, I think,
to see you know,
the 2018 credit Reporting
Act being put in place.
So, no, very positive. All
right. Let's go deeper on the,
on the topic of competition. So what
does competition look like in the past?
What do you think it's going to
look like in the future? Let's go,
go deeper on that topic. Well, I mean,
the past, there hasn't been competition,
right? Through sort of
happenstance of fate,
there's been only one score that's
been allowed to be used for mortgages,
and that score has been there since
even before the last recession. Now,
some of these scores go
back to the nineties.
So it's a system that has
been around a very long time.
It's a system that the Federal
Reserve found failed in 2008.
They found that actually the score
was a big issue at that time,
but hasn't yet been changed. So
for the integrity of the system,
and also just to enable the millions of
consumers that have been left behind by
the current scoring system who actually
are credit worthy and should be able to
have a house, we think
this is really positive,
is the millions of consumers
that have been left behind a,
a conversation that you have with, with
lenders and other stakeholders in the,
in the housing market every day. I think
this is what excites them the most,
right. Because this is, you know,
a house is one of the most important
things that people buy in their lives.
Yeah.
It's also the biggest ability that people
have to create generational wealth.
So from a consumer perspective and
from an organizational perspective,
it's a really big deal. And
when lenders see an opportunity,
particularly when the housing market's
pretty tough to be able to lend to more
people without increasing risk that
excites them. So from your point of view,
what are the,
the characteristics or strategic elements
of Vantage score that help open that
credit box and make houses and,
and housing more accessible?
So there are a few things. The legacy
score has some restrictions on it. Okay.
Which exclude tens of millions
of US consumers, right?
Because Vonner score four uses
up to 24 months of history
is able to then actually build a much
more accurate profile and score people
that would otherwise not have been
scored. Also, it uses rental data,
utilities data,
and other data that can give really good
insights into how a person will perform
on a mortgage. I mean, at the end
of the day, think about it, right?
The rent check is probably the biggest
outlay people have Yeah. On their,
on an ongoing boat basis, right?
So if you're trying to understand
how they'll perform on a mortgage,
seeing how they did on rent
is an absolute winner. I mean,
so rent is probably the most important
element for first time home ownership.
Do you believe an ecosystem where, where
rent or and Vantage score is used for,
for mortgage underwriting that
like first time homeowners have a,
a new advantage or or we open the,
the box for first time ownership to home
ownership to expand faster with Vonage
score,
about 5 million more households should
just be eligible to get a mortgage and
then new system. Okay. That,
and that's before you add rental data
with rental data, there should be many,
many more consumers who should be able
to be either eligible for a conforming
mortgage or be eligible
for better pricing.
What does a housing market look like when
5,000 like new borrowers are eligible?
We, we've talked for, for
years about constrained supply,
and I know there's different
you're a chief economist as well,
so you may have a theory on where
we are in the supply supply demand,
equilibrium, equilibrium, but with
5 million more eligible borrowers,
does that create a more
competitive housing market
where home prices get driven
up? Or is there a, a different you know,
a different element that happens there?
It's a great question. The reality is,
is where we see most of these people
that have been left behind by the current
system,
they tend to be actually in rural areas
or in areas that have traditionally been
high rental areas where there hasn't
been much demand for buying housing.
Right. And so that could actually be very,
very beneficial for those communities.
It can help drive the economy in those
communities and create a better wealth
system in those communities. Yeah,
we always talk about a national housing
market, but we know it's a, you know,
collection of hundreds or
thousands of, of local markets,
which all have different dynamics.
I've seen a lot of supply and demand
analysis by market in the US and
markets like Austin are performing
very different from a markets in
the, in the Midwest where supply has
actually been a little bit tighter. Yeah.
Or for instance, you know,
when we look at Vanish score and some
of the states where there's the biggest
ability to score more people,
West Virginia tops that state with
over 20% of pop the population of West
Virginia not scored under the current
model that would be scored under VAGE
score four. Okay.
So since Director polt came out with
the announcement that Fannie and Freddie
would start accepting Vantage
score, there's been debate,
there's been different viewpoints
and there's been misunderstanding.
What do you think the,
the mortgage market has misunderstood
about Vantage score and what
Fannie and Freddie accepting
VantageScore might mean for,
for them it's a change in a system that
hasn't changed for over 30 years. Yeah.
So it's always going to be quite hard
for people to understand exactly how
that's going to happen,
but the good thing is like we're seeing
such appetite from the large mortgage
originators, from the CRAs and
resellers from the insurance companies.
So there's a huge appetite to get
this going. Everybody believes in,
in this competition, and everybody
believes to be able to score more people.
I think where some of the confusion
all lies is unfortunately,
like in many things these days, there's
a lot of misinformation out there.
And so we do our best to try to correct
that. But I think what, you know,
what people should do is to look
at the independent sources, right?
Look at whether it's the investment
banks that have done analysis on the
different scores and
written reports on it,
or like people like JP Morgan Chase
or Bank of America or Bloomberg,
like go to those sources,
right? You, you know, that they,
they're relatively independent
when it comes to great sources,
but not the sources that loan originators
or consumers are going to be visiting.
I mean, I get all the
equity analyst reports,
but they're not widely distributed.
No, that's true. But I,
I think for a consumer,
I mean most consumers,
when they look at their own credit score,
VantageScore is the score that they
most likely to see. Okay. Right.
So we've we were a pioneer in
consumer display and for the past
15 years or so, where we've seen that
whole consumer display market increase,
we've been by far the most
used score in that area.
So it's not an alien concept to them,
whether they go to Credit Karma,
whether they go to Chase or wherever
to look at their credit score.
It's a score that they see on a regular
basis. Okay. So I definitely see the,
the potential for, for consumer
impact in industry impact.
You talked about the CRAs and resellers.
How does this how does adoption
of Vantage score impact them?
Is there opportunity? Is there threat?
Like give us a, a view there? Well,
they've already put the pipes in. Okay.
So we're delighted that the industry
is so ready and they've already,
they're already passing VantageScore
four through to their originators. And,
and they're working with us.
We're also partnering really closely
to ensure that there's a simulator,
a really good simulator
that can be put in place to,
so that consumers can be helped to figure
out what steps they need to take and
what will have the biggest impact so that
they can get ready for that mortgage.
Okay. So if the pipes are in
place with the CRAs and resellers,
what about with the originators
themselves? Is there work
to be done? You know,
within their own four walls of the,
the large originators to prepare their
operations for VantageScore? I mean, the,
the large ones have gone back. They've
done their homework. They've, you know,
they've back tested and looked at all
their historic data to understand how
Vanish score four will look
like on their own portfolios.
So the big one's already there. Okay. and,
and what I would say is that for those
that are kind of the next step down,
haven't quite done this yet,
we definitely recommend that you do
this because at the end of the day,
if you don't, your competitor is,
and they're going to be able
to get more customers than you.
So I think that's a, a
pretty big deal. All right.
So the big ones have done the work and
have the, you know, have tested and,
and analyzed back data. What
about the smaller lenders?
Is that a dynamic that
they've been prepared for?
We're seeing a mixed bag there.
We see several that see who,
particularly those that are more
mission focused, who see, you know,
being able to open up home ownership
to more communities as part of how they
work. They're really getting behind this,
but then there are others who
are waiting to see what the,
what the big guys are going to do.
And then they'll probably follow
suit once they've seen the successful
implementation at some of the bigger
agencies. So when I talk to originators,
they, they all want to serve
more consumers and do more loads,
but they're also price sensitive
at a, at a report level.
And so what does VantageScore mean for
originators who are concerned about like,
the price they pay for, for
credit data? Over this past week,
we've seen all the three national
credit reporting agencies come out and
publish what their planned
pricing is for VantageScore.
And they've also put out several deals or,
and to provide a lot more easy access to
those that are using the Legacy score.
So we think that is great.
We think that they have heard what
Pulte is looking for and they've
responded in kind.
And now we're actually seeing
real competition because remember,
up to this point,
we've seen the price of these scores
go from what near 30 cents to now
$10 next year. I mean, you know,
that's not a small increase over a
very short period of time. So again,
I think that having another score there,
one particularly that is more
competitive, is going to be great.
And it's probably going
to have to help a lot in,
in the end for the cost of the consumer
and the originators are going to have to
bear. Okay. So you mentioned
the, the three bureau partners.
Can you tell us a little more about
the relationship between the bureaus,
VantageScore? Kind of how like decisioning
and pricing works out? Certainly.
So we are an independent
organization. Yeah.
But we are co-owned by the three national
credit reporting agencies Equifax,
Experian, and TransUnion. Yes. Okay.
And so it's been a great partnership.
We they actually created us for the
purpose of creating a competition in this
space. So, you know, it's been great.
We've had huge success in credit card,
personal loans, auto,
but until this point,
until Pulte came out
with that tweet in July,
we've been kind of kept out of mortgage.
So for now is the first time we're
able to compete a mortgage and that's
fantastic. But no,
it's a great partnership and it's enabled
us to really differentiate to provide
models that if each bureau has
the same information on the file,
then you get the same
score for each bureau.
And that's quite unique and
really valuable as you're
issuing mortgages. Yeah,
that definitely does sound like a
valuable, like, inconsistent data there.
So one of the other like big headlines
and press releases from the past few
months is the, the FICO
direct model, that's another,
that's a competitive
element in the industry.
I think a lot of originators
are trying to figure out how,
how that impacts them from
a pricing perspective.
Can you go a little bit deeper on the
decisions that originators at the,
at the mortgage bank level need
to make about who they work with?
Or is there a decision to be made,
or do we work with everybody?
Like what do we need to figure
out as loan originators?
So we've spoken a few mortgage
originators and honestly,
I've only read the same press releases
on this new delivery model that you have.
Yeah. So there's a lot of things
that aren't necessarily quite clear,
but what's interesting is that you have
a system that's been around for tens of
years and that has been enhanced and
that there have been mistakes and learned
from and, you know, and changes and
adaptions made so that it's very,
very efficient and it runs at scale.
I think now you're talking about changing
that. Yep. And introducing, you know,
scoring at a place which hasn't typically
scored before. But also liability.
I mean, what happens if they
calculate the score wrong?
How are they going to address that? Right.
And what is that impact going to
be on the originator? That's not,
doesn't look good for anyone
when that happens. Right.
And particularly if they're trying to
rush this and get it done in a couple of
months, you know,
it typically takes us about nine months
to make sure that when we install a new
model at the bureau is that it's
doing exactly what it should. Right.
Because we want to make absolutely
certain it does what it says on the tin.
We are all for innovation,
we're all for competition.
But I think a lot of people are scratching
their heads on how is this going to
work and which model is actually going
to work better for lenders. Right. Yeah.
I think what they like is being able to
choose and have different options and to
figure out, you know, which
option's best for them. Yeah.
That's what I'm trying to get
to the bottom of the fact.
There are so many people in the industry
that are scratching their heads about
like what this, what this means for them
and what, like, there, you know, this,
this model that's been in place for,
for tens of decades as you said,
like how that,
how that changes and what new pipes
and data processes they need in their
origination shops.
And so bringing clarity to the originator
seems to be one of the top charges as
we look forward for the,
for the next few months.
You mentioned that the speed of
innovation, like may be a risk,
but it does also feels like the speed
of innovation is something that's help
helping create, create change.
Do you think that like the
introduction of you know,
competition to the market
should slow down a little bit?
Or do you think we're
running at the right pace?
I think it has taken a phenomenal amount
of time to get to where we are today.
Yes. Right. I think, you know,
I think it took less time to get people
on the moon than it's taken to get the
credit scoring market and mortgage to
change. Right. So that's some perspective.
So the reality is, you know,
it, it is good to have change,
it's good to have innovation, it's good
to run at a decent pace. Right? Yeah.
But you've also gotta remember that
the consequences of getting it wrong,
I mean, this is people's lives. This is
about them getting a mortgage. Right?
This is a very important step.
You really want to make sure that
before you push that button or when you,
before you issue that loan that everything
is working the way it should. Yeah.
If it doesn't, the ramifications,
you know, can be quite painful.
Do you think that means that
lenders will put in place some,
some guardrails in the,
in the early days of new model adoption
to make sure they're not opening their
institutions up for risk?
Or do you think there's just different
origination shops will take totally
different approaches
to their appetite for,
for risk or appetite for how wide
the credit box is? Well, I mean,
the good thing is right,
VantageScore four has been available going
back to 2017. Yeah. It's used widely.
It's the most used scoring credit card.
It's used in personal loans, auto loans.
So it has a long history of being
successfully used and implemented in other
areas. Right.
And also we've published the data on
the historical data sets from the GSEs,
so there's been a lot of tire kicking.
So I don't think they see as much
risk on that side of, of the house.
I think though the cogs in the machine
not turning the way they should,
that's probably a, you know, another risk.
And that's probably the one with these
different changes that might be more
heightened for them. The process
and implementation risk. Yeah. Yeah.
Absolutely. Alright,
so I saw your press release this
morning and online adoption of PE of
lenders using VantageScore or,
or signing up for the portal has been
stratospheric in the last few months.
Tell us a little bit more about
that. Well, it's great, as you know,
obviously we're, we're seeing a
lot of the large originators Yeah.
Starting to pull VantageScore in now as
they're preparing for the transition.
We're seeing a lot of focused lenders
doing the same thing, as I mentioned,
those that are focused on a mission.
And we're also seeing those that don't
just go to the GSEs but perhaps submit
loans to the VA or to the FHFA loan
banks have been beginning to pull our
scores so that they can begin preparing
their loans for those types of
securitizations as well. Okay.
So we have an opportunity here and
a platform to go kind of one-on-one
conversation that's, that's
listened to and watched by,
by many I'm sure at MBA. You're
having lots of conversations with,
with lenders and, and clients and
partners. What are some of the,
the harder questions you're, you're
getting that you need to, to answer to,
to bring confidence to all these
people that are still, you know,
kind of scratching their heads about
what the future of of credit reporting
looks like? A lot of people
are a little bit, you know,
when change happens that there's a level
of anxiety that kicks in as you try to,
it's for industry that change frequently.
We don't like change very much
Well, I mean, again,
when you've had something that's run
the same way for a long time Yeah.
Which would probably implemented way
before you even started working at that
organization. Yeah. Right.
Where that historical knowledge of
implementing it the last time is gone.
There's always going to be some aspects
of that that are going to make people
think like, whoa is this, are we ready
for this? Right. But the good thing is,
you know, all the tools are there,
the bureaus are there to
provide their support.
So once you start putting the foot in,
I think everybody's getting
very comfortable with the
support and with all the
information that's available to ensure
that they can make the right decision.
Alright. So we've talked a lot about
VantageScore through the lens of mortgage,
but let's talk about other
lending verticals where
VantageScore has had adoption
and found traction. Give us a
glimpse into that Rikard. Yeah,
so Vantage Score 4 was
launched in 2017. Yeah.
So we have quite a long track
record of that being available.
And actually as of now,
we are the most used credit score in
the United States much because of its
adoption in other products like credit
cards, auto loans, and personal loans.
And we now have over 3,700 financial
institutions that are actively using
VantageScore today. Okay. So you mentioned
3,700 institutions that have adopted.
Can you give us an example of a large
lender that's adopted VantageScore and
found success? Yeah,
so probably one of the
best known is Synchrony,
which is the old GE
Capital. Yes, absolutely.
And so they adopted VantageScore
four for everything they do.
And for them they found
it to be a great success.
It helped them reduce the risk they
had in making and issuing their retail
cards, personal loans and other types
of products. And so what they did,
which is very clever, was that
not only did they adopt it,
but they're also using it
for securitization. Okay.
And so they had a very clever process
where what they did was that they told
the financial markets, Hey,
for a year we're going to show you both
scores so you can begin and adapt and
understand how these scores work.
But then after these four quarters were
turning it off and that worked really,
really well and it started to get the
investment markets more familiar with
VantageScore four and
how to use it. Alright.
So the KPI of success in that world was
measuring risk on the origination front.
There are other KPIs that lenders
like Synchrony use to say VantageScore
has been a success. Absolutely.
And you can see that in our quarterly
earnings announcements. Okay. How,
how many more le consumers they've been
able to lend to as a result of switching
to VantageScore four without
increasing risk. In fact,
they're able to lend to more people and
they've reduced risk at the same time.
Okay. So shifting back over to mortgage,
do you have any advice or what would you
tell originators to do now if they're
interested in comparing their
current credit reporting
strategy to VantageScore or
making the first step to this,
this competitive future?
I would definitely encourage them to
reach out to their credit bureaus.
VantageScore actually offers a customized
report to help mortgage originators
understand what the increase
in addressable market would be,
where they to switch to VantageScore.
Okay. Based on their footprint.
So that can help them get an understanding
of the financial impact of making the
switch. So that's
interesting. So like the,
the go to market is fueled by their
existing credit bureau partner not
directly through VantageScore?
No, it's, it's, it's fueled on,
on the originator's footprint.
Okay. So if they're, for instance,
an originator in Wisconsin,
we can then pull what is going to be the
increased addressable market for them
based on their footprint in the
different counties of Wisconsin. Alright,
that makes a lot of sense. Well, Rikard,
I can't thank you enough for
taking time away from this,
this busy event and this busy expo
hall to have this conversation with me.
It's been a pleasure. Thank you,
sir. It's been delightful. Thank you.
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guidance only, and are subject
to change without notice.
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date.
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