Why a VantageScore® Is More Useful
Who uses the VantageScore® model?
Many of the nation’s top lenders, including national and regional banking institutions, credit unions, mortgage companies, and credit card issuers, use the VantageScore model.
Same Score Range as the FICO Score
VantageScore 3.0 credit score ranges from 300 to 850, a numerical scale more familiar to lenders and consumers.
The VantageScore 3.0 model is a single credit scoring model deployed at all three Credit Bureaus to enhance risk alignment. Not only does this approach facilitate more consistent scoring across all three Credit Bureaus, it enhances the level of confidence across lenders of all types.
How Does VantageScore 3.0 Score More People?
The VantageScore 3.0 model gives lenders access to 30-35 million credit-worthy consumers who would be invisible to old credit scoring models. That’s a group of prospects more numerous than the population of Texas! Nearly 25 percent of these consumers are actually prime or near-Prime credit quality—excellent candidates for mainstream lending products.
The model expands the customer base by implementing the following:
- Expands the trade update criteria from six months—used by traditional models—to 24 months, allowing people who may have been “out of the credit market” for up to two years to receive a score.
- A specific scorecard for those with little-to-no recent credit activity.
- Use of non-trade credit data such as collections, public records and inquiries when no active trade data is present.
- Continued use of rent, utility and telecom data when it is present in a consumer’s credit file.
- The ability to utilize data in consumer credit files that is older than 24 months but remains predictive—an analytic breakthrough and major benefit to infrequent credit users.
- Including consumers whose oldest trade is less than six months old.
Scoring the Unscorable
Prior to their adoption of the VantageScore model, lenders have had difficulties assessing the creditworthiness of these normally unscorable consumers. The ability to better distinguish between consumers with a clear track record of unfavorable credit behaviors from those who simply lack credit histories is a significant advantage.
Individuals in the latter group typically include:
- Young adults just starting their careers
- Recently divorced or widowed individuals with little or no credit in their own names
- Newly arrived immigrants
- Previous bankrupts
- People who are not part of the traditional banking system by choice
Previous automated scoring systems largely ignored this vast category of potential consumers despite the likelihood that many would prove to be low-risk consumers. With the VantageScore 3.0 model, a lender has a greatly enhanced ability to automatically underwrite these consumers with confidence.
VantageScore is a registered trademark of VantageScore Solutions, LLC.