What matters to VantageScore

Dear Colleague,

There are a million things I’d love to write about this month but anything other than what we’ve witnessed in our streets and cities would be tone deaf.

Racial inequality has no place in our society and it needs to be eradicated where ever it exists. And yes, even (perhaps especially) in financial services.

From the beginning of VantageScore, we have had a diversified staff. I am proud of that for a simple reason…diversity enriches all of our lives. Period. It goes to who we are as an organization and who we are individually. It creates and underscores our strengths as human beings.

From the beginning, we also have broken through a rigid system that arbitrarily decided who deserves a credit score and who doesn’t. The first VantageScore model was introduced in 2006 to provide competition in the market, to develop highly accurate credit scoring models, and to reliably score more consumers so that they can equitably gain access to mainstream credit.

In the grand scheme of things, perhaps that seems minor but it’s our role to play. But we all have some role and yours may be more or less impactful than ours. All these missions are important.

Speaking of which, I want to specifically recognize a few of the organizations with whom we partner – these are literally those who are on the front lines. I am so proud of our affiliation and partnerships. In alphabetical order, they are:

  • Asian Real Estate Association of America (AREAA) (NOTE: Be sure to click through to their “5 Questions With” feature where we ask them about the state of Asian American homeownership)
  • Consumer Federation of America (CFA)
  • National Association of Hispanic Real Estate Professionals (NAHREP)
  • National Association of Real Estate Brokers (NAREB)
  • National Community Reinvestment Coalition (NCRC)
  • National Fair Housing Alliance (NFHA)
  • The Urban Institute

I encourage you to reach out to these organizations and understand how you can support their important efforts. At unprecedented times like these, collective silence is part of the problem. It’s time for us to use our voices and rise up together.

In doing so, I am confident and hopeful we will emerge from the myriad of crises we are facing a better, stronger and more unified society. Until then, let’s love and listen. And continue to stay healthy and safe, all.


Barrett Burns

Did you know:
What happens when you apply for a loan

By John Ulzheimer

If you’ve been following the movement of interest rates on mortgages and auto loans, they’re very low. In fact, interest rates on mortgages and auto loans are close to historic lows. This means if you’re in the market to take out a secured loan, where you pledge the collateral to the lender, you can get some fantastic deals.

For many consumers the process of taking out a loan may seem very simple. You fill out some paperwork, wait a few days, and then you find out whether or not you’ve been approved. But what happens on the lender’s end after you click “Submit” on your loan application? Certainly, the process isn’t as simple as it may seem to the applicant. In fact, it’s actually pretty complicated. So what does happen on the “back end” when you apply for a loan?

Step 1 – The Application

Applying for a loan is really the only part of the process where the consumer has direct involvement. A consumer either goes to a mortgage broker, auto dealership, their credit union, or applies online via a lender’s website. What all of these options have in common is a formal request by a consumer to borrow money for the purpose of either buying a large-ticket asset, like a house or car, or otherwise plans to use the money for another reason, like paying off credit card debt.

As it pertains to credit, when you fill out and submit an application you’re providing what is referred to in the Fair Credit Reporting Act as “Permissible Purpose” to the lender. Permissible Purpose is a legal term that indicates the lender and the credit bureaus have a legal right to obtain and provide your credit report or credit reports in response to your application.

Step 2 – Risk Assessment

Once you’ve formally applied and given the lender legal permission to access your credit reports and credit scores, they will do so. This is commonly referred to as a credit “inquiry.” Most lenders have relationships with one, two or all three of the credit reporting companies or an authorized reseller of their credit report information and they will “pull” your information from one or more of those companies.

For clarity, do not assume the only thing lenders care about is the quality of your credit reports and credit scores. Lenders will also consider things like your debt-to-income ratios, your employment status, the loan-to-value ratios for secured loans, and the information that appears on your applications.

Step 3 – The Decision

Once the lender has procured your credit reports, scores, and the other information used for risk assessment, this collective of information is juxtaposed against the lender’s decision criteria. This is the point in the process where the lender decides whether or not to approve your application for a loan.

If you meet all of the lender’s decision criteria, which includes a great amount of credit specific criteria, then you will be approved. If you do not meet the lender’s decision criteria, you will be denied.

If your loan application is denied and the decision was based on your credit information, the lender is required to send you what’s formally referred to as a Notice of Adverse Action. Most people simply refer to these notices as denial letters. This letter will advise you of the lender’s decision and also provide a great deal of information about your credit reports, credit scores, and your rights. If, however, your application has been approved then you will move on to Step 4.

Step 4 – Funding the Loan

If you’ve been approved then the lender will communicate that to you, likely within a few hours or days. If you’ve applied for an auto loan, you may be able to drive away in your new car within a few hours. If you’ve been approved for a mortgage loan, the process of funding may take a few weeks.

For mortgage loans you will go through a process called “closing.” This is generally, but not always, performed by a real estate attorney. The closing attorney will meet with the buyers and sellers of a home and collect signatures on important documents from each side. The closing attorney will also collect funds from the bank and possibly the buyer. In essence the closing attorney makes sure the process is formalized and everyone either pays or gets paid appropriately.

Step 5 – You’re Now a Borrower

Once the closing of a loan has taken place, regardless of the loan type, the consumer formally becomes a borrower, obligor, co-obligor, or a debtor.  These terms all mean the same thing, which is that you now owe money to some company. That company is referred to as your lender or creditor.

There are a variety of different types of lenders. Banks, credit unions, finance companies, and credit card issuers are all considered lenders. You can take out loans from most, if not all, lenders. Even some companies that are traditionally recognized as credit card issuers offer loans.  Discover and American Express are two examples of companies that are more commonly associated with credit cards but that also offer loans.

Step 6 – The Furnishing of Data to Credit Reporting Companies

Many, if not most, lenders will begin to report your loan to the credit reporting companies within a few weeks or months after your loan is approved. This process is formally referred to in the Fair Credit Reporting Act as “furnishing.” As in, your lender will furnish information about your loan to the credit reporting companies, Equifax, Experian, and Trans Union (“CRCs”).

The information furnished by your lender to the CRCs will include data attributes such as the date your account was opened, the original loan amount, the balance, and your payment history. And, if you’ve missed payments or have defaulted on the loan, that information will be furnished as well.

Most lenders will provide updated information to the CRCs once every month, although it can happen more or less frequent. This information is collected by the CRCs from thousands of companies, which can then be aggregated with other information about you into what’s commonly referred to a credit report.

You have the right to check your credit report once every 12 months from the major CRCs via the website The CRCs announced in April 2020 that they would allow consumers free weekly access to their credit reports through the same website through April 2021.

Step 7 – The Scoring of Your Data

Once information about your loan makes its way to the CRCs, that information becomes scorable by any of the commonly used credit scoring models used by lenders and other types of companies. The process occurs when the CRCs compile the information associated with you in their systems and applies a scoring model to the data. This is commonly and informally referred to as “calculating your credit score.”

This process can occur for a variety of reasons. For example, if you apply for another loan, credit card or some other service the lender or service provider can request your credit score from the CRC. And, there are many websites that will provide a free credit score periodically for their registered users. You can find a list of those companies, here.

Step 8 – Paying Off Your Loan

There are a variety of ways to pay off your loan. You can make all of your scheduled monthly payments. You can make some of your monthly payments then make a lump sum payment to exhaust the remaining balance. Or, you can sell the collateral and use the proceeds to pay off the remaining loan amount.  That’s what happens when you sell your house.

Once you loan has been paid off, the lender will update your credit reports to indicate the new zero balance. If the loan is in good standing it will remain on your credit reports for the next ten years. If the loan went into default, it will be removed no later than seven years from the date of the default.

COVID-19’s impact on Millennials

New TransUnion research assesses pandemic’s impact on consumer finances in seven global markets

The COVID-19 pandemic is causing similar financial hardship for consumers around the world, but new research indicates that Millennials (those persons between the ages 26-40) are being challenged the most. A just-released TransUnion (NYSE: TRU) global report including seven regions on five continents found that three in four Millennials (76%) worldwide indicated their household incomes have been negatively impacted by the pandemic. This compares to 64% for all other generations.

In the weeks since the World Health Organization (WHO) declared the coronavirus (COVID-19) a pandemic on March 11, TransUnion has polled thousands of consumers in the U.S., Canada, Colombia, Hong Kong, India, South Africa and the U.K. to determine the impact of the pandemic on their finances. Research for the global report was conducted in mid-April and observed how COVID-19 has impacted millions of global consumers differently based on employer size, generational differences, government interventions and income dynamics.

“COVID-19 has brought about unprecedented financial challenges to people and businesses around the globe,” said Chris Cartwright, CEO of TransUnion. “A thorough and fact-based understanding of these impacts and how best to respond to them is second only to our health and safety in terms of society’s successful recovery from this global pandemic.”

A clear outcome from the research is that many consumers are worried about their finances, but the Millennial generation is under the most stress. In the seven regions featured in the study, 22% of Millennials with household incomes negatively impacted have lost their job due to COVID-19 compared to 16% for all other generations. Just under half (45%) of Millennials with incomes negatively impacted have seen their work hours reduced compared to 35% for the rest of the group. Impacts observed globally are similar in the U.S.

Millennials Facing Greatest Challenge from COVID-19 Pandemic




Percent indicating their household incomes have been negatively impacted

Percent indicating they have lost their job due to COVID-19 (of those with negatively impacted incomes)

Percent who have seen their work hours reduced (of those with negatively impacted incomes)





Other Generations


Other Generations

World Composite*







United States







*World composite includes U.S., Canada, Colombia, Hong Kong, India, South Africa and U.K.

This pressure is compounded by the fact that 61% of Millennials said they have dependent children living at home – a much greater rate than the 39% noted for other generations. In the U.S., 58% of Millennials in the survey have dependent children living at home compared to 36% for other generations.

Millennials who have seen their household incomes negatively impacted also are having more pronounced problems with certain debt obligations. For instance, 63% with negatively impacted incomes report they will not be able to make their rent or mortgage payment compared to 54% for other generations. In the U.S., 61% of impacted Millennials are unable to pay for shelter compared to 57% for other generations.

“Millennials are the first generation to be fully immersed in mass-market digitalization and are savvy at securing credit,” said Charlie Wise, head of global research and consulting at TransUnion. “While Gen Z can say the same, the big difference is that many Millennials are more settled in their careers and are beginning to approach the peak earning period of their lives.”

Where do we go from here?

While the global report makes it clear that consumers are struggling financially, the research suggests that they are coping relatively well. For instance, five in six (85%) global respondents said they have a plan to deal with their financial gap regardless of generation. In the U.S., 87% said they have a plan.

“The big question most everyone is asking is how long the pandemic will last and what will be the impact on the global economy. No crystal ball exists. And people living today have never faced a similar global pandemic with such a far-reaching impact,” said Wise. “The good news is the research demonstrates that people are resilient, and most have figured out a plan for how they will manage their finances until economies re-open and employment opportunities return.”

Additional details about the report as well as resources for consumers looking to minimize the potential negative impact of the pandemic on their credit can be found on TransUnion’s COVID-19 website. Businesses interested in learning how to navigate the impacts of COVID-19 can gain insights from TransUnion webinars, blogs and more here.

About the Global Report

TransUnion surveyed 9,215 consumers in the U.S., Canada, Colombia, Hong Kong, India, South Africa and the U.K during the week of April 13 In addition to generational information, the global report provides insight on the impact of the financial hardship caused by the COVID-19 pandemic on other key factors such as employer size, income dynamics and government interventions. This report is part of TransUnion’s effort to make trust possible between businesses and consumers by providing information and insights so that people can transact confidently.

About TransUnion (NYSE: TRU)

TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing a comprehensive picture of each person so they can be reliably and safely represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good.®

A leading presence in more than 30 countries across five continents, TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people.

5 Questions with AREAA

James Huang is president of Sperry Commercial Global Affiliates, and brings more than 20 years of experience in the commercial real estate industry and currently sits on several advisory boards of both local and national industry organizations including AREAA (Asian Real Estate Association of America) of which he is President-elect of the 15,000 member organization. James successfully led a team of real estate professionals who shared the same innovative approach to commercial real estate; a belief in the power of superior market knowledge and exceptional client service including at one point running seven offices throughout Southern California and over 130 commercial brokers.

Just yesterday (6/16/20), AREAA kicked off a successful Virtual Policy Summit where our very own Barrett Burns was privileged to introduce the keynote speaker – former Secretary of Commerce and former Secretary of Transportation Norman Mineta.  At the Summit, AREAA also shared the results of their latest research study – State of Asia America Report. For some fascinating insights, please read on…

1) Asian American/Pacific Islanders (AAPIs) are the leading demographic (behind Caucasians) for homeownership. Why do  you think homeownership is an investment AAPIs are willing to make?

For many of our community members, owning a home means we’ve finally arrived. Home ownership for many of us is a testament of financial stability and it is a means to create wealth that we can pass along from generation to generation. My parents first bought their home for $50,000. It’s now valued to be over $800K. They would not have thought that the home would appreciate that much and it could be a source of income during retirement or something that they may eventually pass on to their children. That’s why at AREAA, we are passionate about home ownership because it creates wealth and prosperity for families.

2) What are some highlights of the Asian Real Estate “State of Asia America” Report?

  1. There are around 4.1 million AAPIs in the US who are “Mortgage Ready.”
  2. Coastal cities have highest shares of the AAPI “Mortgage Ready” population but affordability is threatened in those areas due to low housing stock.
  3. The AAPI “Mortgage Ready” population takes longer time to save due to concentration in high-cost area
    • There is a huge variation in homeownership rates within the top 20 MSAs (metropolitan statistical areas) by the AAPI population. While the homeownership rate at Riverside metro area is more than 70%, the homeownership rate in NY metro is only 50%.
    •  There is a huge variation in homeownership rate by the AAPI subpopulation as well. For example, while Japanese homeownership rate is around 65%, Nepalese homeownership rate is less than 30%
    • Many AAPI are buying houses and moving to large MSAs in CA, TX and the Northeast.
    • Both AAPI homeownership rate and loan count (conventional purchase only) have been rising post-financial crisis.
    • AAPI loans are more likely to have 3 or more borrowers compared to Non-Hispanic whites, suggestively due to multi-generational households.
    • In aggregate, AAPI tend to be younger, have higher credit scores and income than overall population
    • The 52% of “Mortgage Weak” AAPI applicants (around 0.8 million) were thin files with clean credit records. They didn’t have bad credit but insufficient credit histories to generate a credit score. This is a huge opportunity for lending and credit education
    • There is overall shortage of housing nationwide
    • Some of the least affordable areas for AAPIs are (under 11% affordability):
      • San Jose-Sunnyvale-Santa Clara, CA
      • Kahului-Wailuku-Lahaina, HI
      • San Francisco-Oakland-Berkeley, CA
      • Urban Honolulu, HI
      • Flagstaff, AZ
      • Los Angeles-Long Beach-Anaheim, CA
      • San Diego-Chula Vista-Carlsbad, CA
      • Seattle-Tacoma-Bellevue, WA
      • Boston-Cambridge-Newton, MA-NH
      • New York-Newark-Jersey City, NY-NJ-PA
      • Washington-Arlington-Alexandria, DC-VA-MD-WV

3) With the economic uncertainty looming ahead, what do you think this report will look like next year? 

Depending on how we rebound in the next six months, it could impact median income for many Asian-Americans. Next to the Hispanic population, Asian-Americans have been negatively impacted in jobs and income due to the pandemic. There are thousands of Asian-American business owners who are struggling to stay afloat during this challenging time. However, Asians are very entrepreneurial and creative so we’ll find opportunities to survive this pandemic. As a community, we are known for our resiliency and resourcefulness. I don’t doubt that many of us will find other ways to generate income.

4) What are some obstacles for homeownership for AAPI audiences? And what are some solutions that can help them?

For the most part, affordability is a huge obstacle for our community. If you look at our population, we are in high-cost markets like LA, SF, NY, Boston. It takes time to save for a down payment since we have it in our minds to put down 20%.

Other barriers include thin credit and that’s why we are working to make changes in the underwriting process to allow other credit scoring models in the marketplace. We believe that alternative credit scoring models beyond FICO will open doors of opportunity not just to AAPIs but to other communities of color.

5) Many AAPI have faced discrimination, accusations and are subject to horrific acts of prejudice in the wake of the COVID-19 pandemic. What statement or position has AREAA taken to reassure and support its community during these difficult times?       

It is unfortunate that the rhetoric against Asian-Americans have been perpetuated by hate and ignorance about COVID-19. We’ve been partnering with members of the Asian American Congressional Caucus and other AAPI organizations to affirm our community members that while we are being targeted by hate crimes and prejudice, we respond with acts of kindness. What do I mean by that? Well, if you look at what our members and chapters have done these few months since the pandemic started, we’ve gone to hospitals and healthcare institutions to donate not just masks and PPEs but also food for healthcare providers and those in the frontline. Some of our members have made masks and donated it as well. Some have donated their own money for charitable causes to help with the pandemic. It’s amazing how our community is responding to all this. We know that we will emerge from this pandemic as stronger and better individuals.

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