Experian modern mortgage underwriting is gaining support as consumers seek broader credit evaluations during the homebuying process. New research from Experian® shows strong demand for updated scoring models. The findings also highlight growing consumer awareness around expanded financial data.
According to the research, one-third of consumers would reconsider their mortgage lender based on its credit-scoring model. Specifically, 33% said they would actively seek another lender if their current lender used legacy scores. Those models do not include rent and utility payment history.
The findings point to a growing Experian modern mortgage underwriting trend. Consumers increasingly want lenders to consider more aspects of their financial behavior. As a result, expanded credit data could help more prospective buyers enter the housing market.
The research also found that 52% of consumers would show greater interest in homeownership. That interest would increase if lenders considered additional positive payment history. Rent and utility payments were among the financial behaviors consumers identified.
Gen Z Pushes for Modern Credit Scoring
Gen Z consumers are driving much of the demand for mortgage credit modernization. For this generation, broader credit data can influence lender selection. According to the study, 76% of Gen Z consumers over 18 consider credit-scoring models when choosing mortgage lenders. The scoring model could influence whether they remain with a lender. It could also affect whether they consider another mortgage provider.
“We’ve long advocated for the use of expanded data, including things like rent and utility payments, to help increase access to homeownership,” said Michele Bodda, President Experian Housing, Verifications Solutions and Employer Services. “We’ve invested heavily in these areas and this research shows consumers, and younger borrowers in particular, want to be recognized for their complete financial picture. As Gen Z becomes a larger share of the mortgage market, mortgage lenders have an opportunity to differentiate themselves by embracing expanded data and modern scores that support more comprehensive credit evaluation while making the dream of homeownership a reality for more consumers.”
The findings come as younger consumers prepare for future home purchases. Nearly half of Gen Z consumers over 18 expect to purchase a home within four years. The research places that figure at 48%. Meanwhile, 62% of Gen Z consumers know about newer credit-scoring models. Mortgage lenders are therefore facing increased awareness among potential borrowers.
Modern Scoring Supports Broader Mortgage Access
Consumer expectations also align with changes across the mortgage industry. The Federal Housing Finance Agency (FHFA) continues its transition toward modern scoring models. VantageScore® 4.0 considers alternative data as part of its credit evaluation approach. That data can include rent and utility payment history. Therefore, the model can benefit consumers with limited traditional credit histories.
Experian has also taken steps to support broader adoption. The company recently announced $0.99 pricing for VantageScore® 4.0 for mortgage originations. The move builds on Experian’s previously announced Score Choice offering. That program gives lenders access to VantageScore 4.0 at no additional cost when they obtain a FICO® Score.
Together, these initiatives aim to reduce adoption costs for mortgage lenders. They also seek to expand lender choice across the mortgage market.
Furthermore, the initiatives support the industry’s shift toward modern credit scoring. Broader data can help lenders assess consumers beyond traditional credit histories. The research suggests that consumer expectations are changing alongside industry practices. Buyers increasingly want mortgage lenders to recognize their broader financial picture.
As mortgage providers adopt modern scoring models, expanded payment data could become increasingly important. Consequently, lenders may gain new opportunities to serve consumers with limited traditional credit histories.
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News Source: Businesswire.com
