First-of-Its-Kind Independent Study Finds FICO® Score 10T the Most Predictive Credit Score for Mortgage Lending

Key Terms

fico score 10t financial

A FICO Score 10T is a specific version of the widely used consumer credit score that summarizes a borrower’s creditworthiness on a scale lenders use to decide loans and rates. It looks at longer payment trends and recent account behavior so scores can move more noticeably than older models; think of it like a fitness tracker that tracks both long-term habits and recent workouts. Investors watch which score version lenders use because shifts in underwriting sensitivity affect loan approval rates, interest spreads, and the credit quality of financial portfolios.

vantagescore 4.0 financial

VantageScore 4.0 is a consumer credit score model that summarizes a person’s creditworthiness into a single number, using up-to-date credit file information and modern statistical methods. Think of it as a quick “risk score” like a one-number weather forecast for a borrower: lenders and investors use it to decide who gets loans, at what price, and to estimate default risk in consumer lending portfolios, so shifts in average scores can affect credit availability and financial returns.

gse financial

A GSE (government-sponsored enterprise) is a privately owned company created by the government to support a public policy goal, such as making home loans or agricultural credit more available. Think of a GSE as a bridge that helps private lenders reach more customers by backing loans or buying them, which can stabilize markets and lower borrowing costs; investors watch GSEs because their ties to government policy and large balance sheets can affect risk, liquidity and returns.

fha loans financial

FHA loans are U.S. government‑insured mortgages designed to let buyers qualify with smaller down payments and more flexible credit standards than many conventional loans. They matter to investors because changes in FHA lending affect homebuying demand, the health of banks and mortgage companies, and the risk and supply of mortgage-related securities—like a safety net that makes the housing market accessible to more people and shifts where money flows in the housing sector.

trended credit data financial

Trended credit data is a record of a borrower’s credit behavior over time—showing how balances, payments and utilization rise or fall month to month—rather than a single snapshot. Like watching a short video instead of a photo, it helps investors see whether credit risk is improving or deteriorating, which improves forecasting, loan pricing and the assessment of a company’s or loan pool’s long‑term financial health.

mortgage default risk financial

Mortgage default risk is the likelihood that a borrower will stop making required home-loan payments, potentially leading to foreclosure or a loss for the lender. Investors care because higher default risk lowers the expected cash flow and market value of loans or securities backed by those loans, similar to how a landlord’s rental income drops if tenants stop paying; it influences pricing, yields and how much capital lenders and investors set aside for losses.

mortgage originations financial

Mortgage originations are the creation of new home loans when a lender approves and provides the money for a borrower to buy or refinance a property. Investors watch originations because they signal demand for housing and the health of banks and mortgage firms—think of originations as a pipeline of new customers that can produce interest income for lenders and indicate broader trends in credit risk and the housing market.

pricing model financial

A pricing model is a structured method companies or analysts use to estimate the fair price of a product, security or asset by combining factors such as costs, expected demand, risk and market conditions. Investors care because the model shapes revenue and valuation forecasts and guides buy/sell decisions—think of it as a recipe that turns assumptions into projected profits; if ingredients or measurements change, the expected outcome and investment risk change too.

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New white paper by Milliman shows FICO Score 10T outperforms VantageScore 4.0 on all mortgage types, including GSE and FHA loans

BOZEMAN, Mont.--(BUSINESS WIRE)-- Global analytics software leader FICO (NYSE: FICO) is elevating findings from a newly released white paper by independent actuarial firm Milliman, which found that FICO® Score 10T is the most predictive credit score for evaluating mortgage default risk. The analysis was performed across all mortgages, including Fannie Mae/Freddie Mac and FHA mortgages, with consistent results across each population.

The Milliman analysis is the first independent, head‑to‑head study to evaluate the predictive performance of two new modern scores, FICO Score 10T and VantageScore 4.0, using a large historical sample of U.S. mortgage originations covering multiple distinct time periods from 2011 to 2023. According to the results of the Milliman study, FICO Score 10T produced higher measures of predictive power and, therefore, risk differentiation across multiple mortgage product types, reinforcing its value for lenders, investors, and the broader housing finance system.

Key findings from the Milliman analysis include:

• FICO® Score 10T performed better, as measured by three calculations of predictive power, across all types of mortgage loans: In an analysis of nearly 20 million mortgages, Milliman found that FICO Score 10T consistently predicted mortgage defaults more accurately than VantageScore 4.0 across all mortgages and individually for GSE and FHA loans.
• The performance advantage was strongest in FHA lending: FICO Score 10T outperformed VantageScore 4.0 by more than 8%¹ in FHA lending, the segment that serves first-time homebuyers and underserved borrowers, demonstrating that the more predictive score also delivers the greatest advantage for the people for whom an accurate credit assessment can make or break a path to sustained homeownership.
• FICO Score 10T's performance advantage over VantageScore 4.0 has more than doubled since 2018: The analysis also shows that the performance difference between FICO Score 10T and VantageScore 4.0 is greatest for more recent origination years and generally populations with more observed defaults. For example, in the 2023 GSE loan vintage, FICO Score 10T outperformed by 7.4%, more than double the already impressive 3.4%² improvement observed on the 2018 vintage. This result highlights the robustness of FICO Score 10T and the time-tested, proven FICO blueprint it is based on that has earned the trust of the mortgage industry for over 30 years.

FICO Score 10T incorporates trended credit data and rental payment information when available in the credit bureau file, offering a more complete view of borrower behavior while avoiding model features of the alternate credit score that disadvantage first-time homebuyers or those without prior homeownership history.

"FICO has been a cornerstone of mortgage credit risk for decades,” said Julie May, vice president and general manager of B2B Scores at FICO. “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, and reflects Milliman’s own methodology and conclusions. The full white paper is available at https://www.milliman.com/en/insight/fico-score-10t-vantagescore-4-analysis-credit-mortgage.

Free Access to FICO Score 10T Lower‑Cost Path to Adoption

To ensure lenders can evaluate the findings for themselves, FICO Score 10T is currently available at no cost alongside Classic FICO through the FICO Score 10T Free Access Program, enabling side‑by‑side testing without requiring lenders to pay for an additional score.

More than 55 mortgage lenders representing $557 billion in originations and $1.6 trillion in mortgage servicing portfolios have already signed up for the FICO Score 10T Free Access Program including Rate, Guild, Cross Country Mortgage, Planet Home and more. As lenders navigate an increasingly complex risk environment, FICO is elevating awareness of the program to ensure the market knows that access is available today.

In addition, through the FICO Mortgage Direct License Program, FICO has introduced a simplified and transparent pricing model for lenders ready to deploy FICO Score 10T in production. Under the program, FICO Score 10T is priced at $0.99 per score with a $65 funding fee, providing a lower‑cost alternative to legacy distribution models while preserving pricing transparency.

"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,” added May. “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."

For more information on how to sign up visit the FICO Score 10T Migration Resource Center.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 U.S. and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 4 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO^® Score, used by 90% of top US lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency.

Learn more at https://www.fico.com.

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FICO is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.

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1 According to Milliman, FICO 10T provided 8.2% relative improvement in bottom decile lift on FHA-backed loans when compared to VantageScore 4.0.

2 As measured by relative improvement in Kolmogorov-Smirnov (K-S) Statistic.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20260504146594/en/

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Source: FICO