FICO has announced findings from a white paper by independent actuarial firm Milliman, which concludes that FICO® Score 10T is the most predictive credit score for evaluating mortgage default risk, consistently outperforming VantageScore 4.0 across all mortgage types, including Fannie Mae/Freddie Mac (GSE) and FHA loans.
The Milliman analysis represents the first independent, head-to-head evaluation of the predictive performance of FICO Score 10T and VantageScore 4.0. The study utilized a comprehensive historical sample of U.
S. mortgage originations spanning from 2011 to 2023, covering multiple distinct time periods.
According to the study’s results, FICO Score 10T exhibited higher measures of predictive power and risk differentiation across various mortgage product types. An analysis of nearly 20 million mortgages confirmed that FICO Score 10T consistently predicted mortgage defaults more accurately than VantageScore 4.0, both overall and specifically for GSE and FHA loans.
The performance advantage was particularly strong in FHA lending, a segment vital for first-time homebuyers and underserved borrowers. Here, FICO Score 10T outperformed VantageScore 4.0 by more than 8%, reflecting an 8.2% relative improvement in bottom decile lift. The analysis also indicated that FICO Score 10T’s performance advantage over VantageScore 4.0 has more than doubled since 2018. For instance, in the 2023 GSE loan vintage, FICO Score 10T showed a 7.4% outperformance, an increase from the 3.4% improvement observed in the 2018 vintage, as measured by relative improvement in the Kolmogorov-Smirnov (K-S) Statistic.
FICO Score 10T incorporates trended credit data and, where available, rental payment information from credit bureau files. This approach aims to provide a more comprehensive view of borrower behavior, designed to avoid disadvantaging first-time homebuyers or individuals without prior homeownership history.
Julie May, vice president and general manager of B2B Scores at FICO, commented on the findings. “FICO has been a cornerstone of mortgage credit risk for decades,” May stated. “As we enter a new chapter of credit score policy, the conversation about which score is best should be grounded in facts, specifically, an empirical comparison of the modern scores. The scores use the same data — rental, utility and trended. The difference is in how we use the data and this Milliman study confirms what more than 50 lenders have already seen in practice: our use of the data in FICO Score 10T delivers the strongest predictive performance available for mortgage lending today and can be trusted to continue to deliver that predictive performance for years to come.” The analysis was prepared independently by Milliman as part of a consulting engagement with FICO, reflecting Milliman’s own methodology and conclusions. The full white paper is accessible on the Milliman website.
To facilitate evaluation by lenders, FICO Score 10T is currently available at no cost through the FICO Score 10T Free Access Program, allowing side-by-side testing alongside Classic FICO without additional score charges. Over 55 mortgage lenders, collectively representing $557 billion in originations and $1.6 trillion in mortgage servicing portfolios, have enrolled in this program. Participants include firms such as Rate, Guild, Cross Country Mortgage, and Planet Home. Additionally, FICO has introduced the FICO Mortgage Direct License Program, featuring a simplified pricing model for production deployment at $0.99 per score with a $65 funding fee, offering a lower-cost alternative to traditional distribution.
May further added, “Credit score modernization is one of the most consequential shifts the mortgage market has seen in decades, and lenders need the ability to evaluate their options with real data. We’ve removed every barrier we can with the FICO Score 10T Free Access Program, and our newest and most predictive credit score is available for free alongside the score lenders already know and trust. The performance findings speak for themselves; we want to make sure every lender has the chance to see them.”
