VantageScore Says Rent Data Unlocks $777B Mortgage Opportunity

Including on-time rent payments to credit reports would help millions of rental households become mortgage-worthy, according to VantageScore’s new study.

This data is important because it displays how making payments counts. The research reviewed 600,000 U.S. renters using Esusu’s verified records.

When on-time rent payments were added in VantageScore 4.0, the ability to predict risk increased by 11%. Subprime lenders may find that this trend presents an opportunity for millions of responsible but previously overlooked renting consumers — consumers who have never qualified for prime credit.

For years, credit systems have ignored rent — the biggest bill for many households. Missed payments counted but steady ones didn’t. That imbalance is finally changing.

More states are passing rent-reporting laws. In addition, the FHFA approved VantageScore 4.0 for Fannie Mae and Freddie Mac loans. This was a data milestone and it helped more renters buy homes.

The Data Behind the Lift

Scores were more accurate after the addition of rent history. Rent data helped spot 11% more serious delinquencies. The data increased predictive strength by 3.7%.

VantageScore’s new study reveals how on-time rent payments can help millions become mortgage-eligible households.

Renters with limited credit files improved the most. Those without tradelines saw average increases of as much as 67 points. Inactive borrowers got a boost of 50 points. Many of those new mortgage-ready renters were subprime borrowers. When rent gets added, their risk looks far better than scores alone suggest.

Most importantly, renters whose scores exceeded 620 based on rent data performed as well as those who scored 620 without it. This parity shows the model scores keep their integrity. So lenders can have confidence to expand access without additional risk.

Integration and Infrastructure Hurdles

Rent reporting is still rare even with these gains. Only 13% of renters have their rent payments reported. That limits data flow between property managers and fintechs, as well as the big credit bureaus.

This low adoption should enable fintechs and property software firms to build better data pipelines. Major credit bureaus, too.

Operational Readiness

Lenders who want to use this new data will have to update their systems. Loan-origination (LOS) and automated-underwriting (AUS) platforms need updates to read verified rent files. Property managers and fintechs will have to use standardized data pipelines. Doing so cuts manual checks. In addition, it supports regulatory reports.

The upside is substantial — VantageScore estimates roughly $777 billion in potential mortgage originations if rent data were widely used.

Impact on a Subprime Lender

FHFA’s approval of VantageScore 4.0 gives lenders a green light. The addition of rent data increases the number of qualified borrowers. At the same time, it keeps credit standards safe. Subprime lenders that use VantageScore 4.0 can find borrowers with stable payment habits, even when their credit file is thin or damaged.

The addition of rent data increases the number of qualified borrowers, while keeping credit standards safe.

Lenders can train their teams and update their systems to use rent data. “Positive rental payments are highly predictive and allow VantageScore 4.0 to measure a borrower’s true ability to meet mortgage debt obligations,” said Dr. Andrada Pacheco, Chief Data Scientist at VantageScore.

For ESG-minded lenders, the addition of rent data also shows measurable inclusion. It aligns with the goals of the Community Reinvestment Act and provides fair-access results.

Industry and Regulatory Context

Several states require or encourage rent reporting. Other states have it on their dockets. These efforts align with federal bipartisan bills that address credit reporting.

Competition is heating up. Models such as FICO 10T are adding new data types. But VantageScore 4.0 was built from the start to use rental data. Actual predictive lift will help determine which tools will get used more. Predictive performance, not just inclusion, is the important difference in the contest among scoring systems.

Bottom Line

Rent data has moved from “nice to have” to “need to have.” VantageScore 4.0 shows that on-time payments increase accuracy and access. The model shows inclusion and risk control can ride the same trail.

Subprime lenders can grow their portfolios responsibly by recognizing creditworthy renters — and simultaneously help more families achieve homeownership.