John Brown
Member
Experian modern mortgage underwriting is gaining momentum as consumers increasingly expect lenders to use broader financial data when evaluating mortgage applications. New Experian research shows that many prospective homebuyers want lenders to consider payment histories beyond traditional credit accounts, including rent and utility payments. The findings suggest that modern credit-scoring models could influence lender choice and potentially expand access to homeownership.
The research comes as mortgage lenders face changing borrower expectations and an evolving credit-scoring landscape. Consumers are becoming more aware of newer scoring models and the potential benefits of using additional financial information to create a more complete picture of creditworthiness.
Consumers Want More Comprehensive Mortgage Credit Evaluation
Experian's research found that 33% of consumers would actively look for another mortgage lender if they discovered that their current lender relied on legacy credit-scoring models that did not consider rent and utility payment history. This indicates that the credit-scoring approach used by a lender could increasingly become a factor in mortgage shopping decisions.The findings also show that consumers are interested in having their broader financial behavior recognized during the mortgage application process. More than half, or 52%, said they would be more interested in pursuing homeownership if lenders considered additional positive payment history, including rent and utility payments.
This shift could be particularly important for borrowers whose traditional credit files do not fully reflect their ability to manage recurring financial obligations.
Gen Z Leads Demand for Modern Credit Scoring
Younger consumers are emerging as a major force behind the demand for updated mortgage scoring practices. Experian's study found that 76% of Gen Z consumers aged 18 and older say the type of credit-scoring model used by a mortgage lender would influence whether they remain with that lender or consider another provider.Gen Z is also becoming more familiar with alternative and modern credit-scoring models. Nearly half, or 48%, of Gen Z consumers surveyed expect to be in a position to purchase a home within the next four years.
At the same time, 62% of Gen Z consumers are aware that mortgage lenders are beginning to gain access to newer credit-scoring models. This growing awareness could encourage lenders to communicate more clearly about the data and scoring methods they use when evaluating applicants.
Expanded Data Could Improve Homeownership Access
Traditional credit histories do not always capture every aspect of a consumer's financial behavior. Regular rent and utility payments, for example, can demonstrate consistent financial responsibility but may not be fully reflected in older scoring approaches.Modern scoring models are designed to incorporate additional information to provide lenders with a broader view of a borrower's financial profile. VantageScore 4.0, for example, can incorporate alternative data such as rental payment history and utility payments.
For consumers with limited traditional credit histories, expanded data could provide additional information that helps lenders evaluate their creditworthiness.
This does not mean every borrower will automatically qualify for a mortgage. Instead, the additional information can give lenders more data points to consider when assessing risk.
Mortgage Industry Moves Toward Modern Scoring
Consumer interest in modern credit scoring comes as the mortgage industry continues transitioning toward updated scoring models. The Federal Housing Finance Agency has been moving the mortgage market toward the use of newer credit-scoring models, including VantageScore 4.0.The transition reflects broader changes in how lenders evaluate consumer credit. Modern scoring models can provide more current and comprehensive information while incorporating data that traditional models may not fully capture.
For mortgage lenders, adopting these models can also create an opportunity to improve the borrower experience and potentially reach consumers who have historically been underserved by traditional credit evaluation methods.
Experian Works to Lower Adoption Barriers
Experian has introduced initiatives intended to make modern scoring more accessible to mortgage lenders. The company recently announced pricing of $0.99 for VantageScore 4.0 for mortgage originations. It also previously introduced its Score Choice offering, which provides lenders access to VantageScore 4.0 at no additional cost when they obtain a FICO Score.Lower implementation and scoring costs could make it easier for lenders to incorporate newer models into their existing mortgage workflows.
The availability of multiple scoring models can also give lenders more flexibility as the industry moves away from relying exclusively on legacy approaches.
Modern Scoring Could Become a Competitive Differentiator
As consumers become more aware of how credit scores affect mortgage decisions, lenders may increasingly use their scoring capabilities as a point of differentiation.Borrowers may want to know whether a lender considers a broader range of financial information when assessing applications. This could encourage mortgage providers to communicate the benefits of modern scoring more clearly throughout the homebuying journey.
For lenders, adopting modern scoring could therefore become more than a compliance or technology initiative. It could become part of their strategy for attracting new customers and improving access to potential homebuyers.
Supporting Consumers With Limited Credit Histories
One of the potential benefits of expanded credit data is its ability to provide additional context for consumers with limited traditional credit histories.A borrower may have a relatively short credit history but a strong record of making recurring housing and utility payments. Modern scoring models that can incorporate this information may provide lenders with additional insight into the consumer's financial behavior.
This approach could help address part of the credit confidence gap that keeps some prospective buyers from entering the housing market.
Changing Expectations Across the Mortgage Market
The Experian research indicates that consumer expectations are evolving alongside changes in mortgage technology. Buyers increasingly want lenders to consider their complete financial picture rather than relying only on conventional credit information.For younger consumers in particular, the type of scoring model used by a lender could influence where they choose to apply for a mortgage.
As awareness of modern scoring grows, mortgage providers may face increasing pressure to demonstrate that their credit evaluation processes reflect current financial realities.
The Future of Modern Mortgage Underwriting
The growing consumer interest in modern credit scoring points toward a broader transformation in mortgage underwriting. Expanded financial data, updated scoring models, and improved technology can give lenders new ways to evaluate borrowers while potentially creating more opportunities for qualified consumers.Experian's research suggests that this transition is already influencing borrower expectations. With 33% of consumers saying they would consider changing lenders because of legacy scoring models and 52% expressing greater interest in homeownership when additional positive payment history is considered, modern credit evaluation could become an increasingly important part of the mortgage market.
As Gen Z becomes a larger segment of the homebuying market, lenders that adopt modern scoring models and communicate their benefits effectively may be better positioned to meet changing consumer expectations.
The move toward broader data and modern mortgage scoring ultimately reflects a larger shift in financial services: consumers want their financial behavior to be evaluated more comprehensively, while lenders need better tools to understand credit risk. The continued adoption of modern scoring models could help bridge these priorities and support a more inclusive and technology-driven mortgage market.
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