How Using Modern Credit Score Model Development Methodology and Data Leads to Scoring Approximately 40 Million More Consumers without Lowering Risk Standards

VantageScore Solutions, LLC, the company behind the VantageScore credit scoring models, released a white paper discussing how modern data and methodologies facilitate more accuracy, more predictiveness and more inclusiveness in credit scoring.

The white paper Anything but Conventional: Leveraging New Modeling Techniques and Better Data to Score Tens of Millions More Consumers with More Predictiveness refutes two myths in the marketplace:

  • Myth 1: only recent and repeated credit users can be reliably scored.
  • Myth 2: using modern scoring methodology and data to score consumers creates a race to the bottom or lowering of standards.

The results of thorough research and testing showcase the ineffectiveness of using traditional scoring data and methodology to score more unconventional users of credit (e.g., those who are neither recent nor repeated credit users). Specifically, study findings conclude:

  1. There are tens of millions of consumers including those with relatively low levels of credit risk who are not scoreable with conventional models.
  2. Given the same credit score, there is no statistically significant difference in default outcomes between conventionally scored consumers and newly scoreable consumers even though different elements of their credit report are being utilized.
  3. Newly scoreable consumers do not exhibit different default rates (measured as delinquency of 90 days or more over 24-months) compared to conventionally scored consumers with similar scores.
  4. Further, across all product categories, how quickly a consumer defaults on a new loan is comparable between newly scoreable consumers and conventionally scored consumers with similar scores.

About 40 million unconventional consumers of credit are considered invisible to a traditional credit scoring model.* With the use of the latest trended credit data and leveraging machine learning to score more consumers, VantageScore 4.0 provides a more accurate assessment of credit risk for these previously unscoreable consumers; achieving similar prediction accuracy compared to conventional models when measuring credit behavior over the standard 24-month period.

There has been much speculation about how usage of the latest approaches in credit score modeling will lead to a ˜race to the bottom, but the numbers dont lie. More than 10.5 billion VantageScore credit scores were used last year with over 2,200 lenders using our tried-and-tested models. This is the ultimate litmus test of success, said Barrett Burns, CEO and president of VantageScore Solutions, LLC. More fittingly, the reality of this situation should be characterized as a ˜race to the top to whom lenders can trust. And we, at VantageScore, are proud to lead the way.

For more details on the Anything but Conventional: Leveraging New Modeling Techniques and Better Data to Score Tens of Millions More Consumers with More Predictiveness white paper, visit: www.VantageScore.com/AnythingButConventionalWP.

* The VantageScore 4.0 model allows lenders to accurately assess approximately 40 million more consumers than conventional models.

About VantageScore Solutions

Credit scores can impact many aspects of your life, everything from whether you are able to get a loan and how much interest you will have to pay to whether you are able to rent an apartment. At VantageScore, we understand the impact credit scores have and we take that responsibility seriously.

VantageScore Solutions, LLC (www.VantageScore.com) is the independently managed company that owns the intellectual property rights to the VantageScore credit scoring models and is the leader in scoring innovation. The recently introduced VantageScore 4.0 model assesses approximately 40 million consumers who typically are not scored by conventional models “ without sacrificing predictiveness.

VantageScore credit scores are used by lenders, landlords, utility companies, telecom companies, and many others to determine creditworthiness. A recent study found that nearly 10.5 billion VantageScore credit scores were used by over 2,800 unique users, including more than 2,200 lenders, from July 2017 to June 2018. By using the VantageScore model, these enterprises have access to many more consumers, and in turn, consumers have greater access to mainstream credit.

While there are many credit scoring models in the industry, the win-win for VantageScore is its innovative, highly predictive, patent-protected, tri-bureau scoring methodology that provides lenders and consumers with more consistent credit scores across all three national credit reporting companies.

Jeff Richardson
203-363-2170
[email protected]