As the Federal Housing Finance Agency (FHFA) opens the gates for lenders to use VantageScore 4.0 alongside, or in place of, FICO scores for mortgages sold to Fannie Mae and Freddie Mac, Fair Isaac Corporation isn’t staying quiet.
In a new white paper, FICO asserts that its flagship model, FICO Score 10 T, “materially outperforms” VantageScore 4.0 in identifying mortgage default risk.
The paper claims Score 10 T identifies 18% more defaulters in the lowest credit decile — a key risk band for lenders — compared to 3.4% for VantageScore 4.0, a more than fivefold advantage.
The message from FICO, though in its own interest, is clear: For mortgage originators, that gap means more precise risk assessments, higher approval rates, and tighter pricing for borrowers.
Picking Apart the Numbers
The paper compares the predictive power of the scoring models using statistical measures like the Receiver Operating Characteristic (ROC) curve and Kolmogorov–Smirnov (K-S) statistic — standard tools for evaluating model performance.
On a sample mimicking GSE-conforming loan vintages from 2016–2017, FICO Score 10 T showed a relative improvement of 18.8% in the K-S statistic over the classic FICO model, and an 18.1% lift in defaulter detection in the lowest decile.
FICO contrasts this with an Urban Institute analysis that showed VantageScore 4.0 edged out Classic FICO by 3.4% in similar metrics — and only under conditions that FICO argues unfairly handicap its older model.
The 'Truncation' Trap
FICO’s report also accuses VantageScore 4.0 of benefiting from a “truncation anomaly” in GSE datasets. Because Fannie Mae and Freddie Mac typically avoid loans with Classic FICO scores under 620, historical data doesn’t reflect Classic FICO’s full score range. This, FICO claims, artificially boosts VantageScore’s performance by comparison.
In short, FICO argues the playing field isn’t level — and even so, claims Score 10 T still wins.
Fairness In Focus
The FICO paper also critiques VantageScore 4.0’s use of mortgage-specific variables, such as whether a borrower currently has or ever had a home loan. FICO argues this penalizes renters — especially first-time buyers, younger borrowers, military families, and underserved communities.
FICO Score 10 T avoids using mortgage history altogether while including rental data when available, the report states.
Notes Model Changes
FICO also questions VantageScore’s decision to strip medical collections from its scoring model after submitting it for FHFA approval. That change, FICO claims, could undermine the integrity of the GSE score validation process.
Bottom Line for Lenders
FICO says more than $300 billion in annual originations and $1.5 trillion in servicing portfolios have tapped Score 10 T outside the GSE channel. The company is making its case that lenders looking to hedge risk, sharpen pricing, and serve more borrowers fairly should follow suit.
In a post Wednesday afternoon on X, FHFA Director William J. Pulte hailed FICO’s white paper as a sign of competition, and perhaps cost savings, among credit scoring services providers.
“I am glad to see FICO and VantageScore competing today,” Pulte wrote. “Today, FICO released a white paper arguing theirs is more predictive than Vantage. This is good. We need COMPETITION. I believe there will be more than 2 credit scores, with high predictability, and low costs.”
