"VantageScore said the results demonstrate that rent is both a strong indicator of repayment risk and a tool for greater financial inclusion. The study analyzed the impact of this positive rental data on the renter's VantageScore 4.0 credit score. It found that adding consistent, on-time rent payments to credit files improves the predictive performance of the VantageScore 4.0 credit scoring model. The data helps to identify up to 11% more defaults in higher-risk score ranges and delivers a 3.7% increase in overall predictive accuracy."
"When timely rental payment data is added to credit files, consumers previously considered credit invisible achieve an average VantageScore 4.0 of 654. Nearly all 99.7% receive a score of at least 620, which meets the minimum mortgage eligibility threshold under current guidelines from Fannie Mae and Freddie Mac. Consumers who qualify for a VantageScore 4.0 credit score of 620 or higher after adding positive rental payment data perform on par with other borrowers who have the same score, according to the findings. VantageScore also noted that incorporating positive rent data could have a significant impact on the mortgage market. The company estimates that including on-time rental payments in credit files could translate into as much as $777 billion in potential mortgage origination volume."
Rent is both a strong indicator of repayment risk and a tool for greater financial inclusion. Adding consistent, on-time rent payments to credit files improves the predictive performance of the VantageScore 4.0 model, identifying up to 11% more defaults in higher-risk ranges and increasing overall predictive accuracy by 3.7%. When timely rental payment data is added, previously credit-invisible consumers average a VantageScore 4.0 of 654, with 99.7% receiving at least 620, the minimum mortgage eligibility threshold under current Fannie Mae and Freddie Mac guidelines. Including on-time rent payments could translate into up to $777 billion in potential mortgage originations.
Read at www.housingwire.com
Unable to calculate read time
Collection
[
|
...
]