VantageScore has released the newest version of its credit-scoring model, VantageScore 4plus.
The new version combines the power of alternative open banking data with traditional credit data to give lenders a substantial predictive lift of up to 10% compared to the industry leading VantageScore 4.0 credit score, which itself has up to an 8% lift over conventional scoring models.
The increased predictive power of the new version will help lenders reduce the risk of opening new lines of credit while maintaining new lending growth with customers who would not have been approved for credit previously. This includes those who are not current account holders, are recent immigrants, or have avoided using credit products but demonstrate positive cash management behaviors.
New version will also help lenders reduce risk among prime borrowers, who have been seeing increased delinquencies. By using bank data, VantageScore 4plus sees trends in consumer distress months before the credit file which is critical in the current economic uncertainty.
“By harnessing the power of alternative open banking data, VantageScore 4plus is ushering in a new era of consumer credit scoring that is transformational for lenders,” says Silvio Tavares, president and CEO, VantageScore, in a release. “As the fastest growing credit scoring company in the U.S., with over 42 percent growth in 2023 and 27 billion credit scores used per year, lenders are recognizing the innovation and predictive power of VantageScore credit scores.”
Available now for lenders to pilot, VantageScore 4plus is compatible with all major aggregator APIs and works for any credit report from Experian, Equifax or TransUnion.
VantageScore 4plus uses the same scoring range as VantageScore 4.0 (300 to 850) and also has aligned score-to-odds ratios. As a result, most lenders will not need to adjust their credit/lending policies to use the new VantageScore 4plus credit score.
“At a time when delinquencies are reaching the highest levels we have seen in recent history, the need for a credit score that gives deeper insights into a member’s ability to pay back is critical,” says Yazel Pardo, head of credit risk at Patelco Credit Union. “Through our testing of VantageScore 4plus, we’ve seen its ability to more accurately represent a consumer’s creditworthiness, helping Patelco increase its ability to lend to more members during these uncertain economic times.”’’
VantageScore 4plus offers lenders the ability to more seamlessly utilize consumer-permissioned bank account information in their strategies versus using attributes which requires rebuilding models, credit policies and technology resources.
“The use of consumer-permissioned bank account data is a huge step forward in creating a credit score that is more predictive and reflective of a consumer’s full financial profile, helping them build their credit and gain access to mainstream financial products,” adds Dara Duguay, CEO of Credit Builders Alliance. “We applaud VantageScore’s innovation and encourage greater usage of VantageScore 4plus among lenders.”
Photo: Agence Olloweb