Search

VantageScore 3.0 Released, Touts Big Changes

by devteam March 13th, 2013 | Share

VantageScore Solutions is releasing a new credit scoringrnmodel which it says will enable lenders and others using the system to pullrnscores on 27 to 30 million previously unscorable consumers.  The company claims its model, calledrnVantageScore 3.0 provides up to 25 percent better predictiveness and uses thernconsumer-familiar scoring range of 300 to 850. rnThe model was built using a sample of 45 million anonymous credit files.</p

Testing ofrnits new model shows that it provides improves predictive strength across allrnindustries and applications but in particular within the key prime andrnnear-prime consumer populations, the most sought after group among mainstreamrnlenders.  </p

The newrnmodel is said to be able to score more individuals than traditional scoringrnmodels through introduction of a thirteenth scorecard to generate a predictivernscore where an individual has little or no recent credit activity.  The model factors in non-tradeline creditrndata such as collections, public records, and inquiries when active tradelinerndata is not available and utilizes tradeline data that is aged more than 24rnmonths but remains predictive.  The modelrnalso uses rent, utility, and telecom data when it is available. </p

The improved predictiveness, which is presentrnwithin the same population for originations in the real estate, auto, andrnbankcard segments, is demonstrated by nearly identical risk alignment acrossrnall three credit reporting companies (CRC); maximum predictive performance forrnboth originations and account management, and provides consumer scores whichrnare within 20 points across all three CRCs for 80 percent of accounts. Thernlatter feature will allow lendersrntornhave confidencernin default probabilitiesrnregardless of which credit reporting company pulls the score.</p

The company said the key reasonsrnfor the improved performance is using more granular data from all three CRCsrnwhich allowed the model’s designers to select 150 of the most predictiverncharacteristics from among around 900 that were tested.  This allows the user to separate first mortgagernfromrnother mortgage related transactions, facilitating greaterrnintelligence with regard to a borrower’s mortgage-related debt.  It also allows more distinct definitions of data, such as the ability to identify studentrnloan accounts from otherrntypes of installment accountsrnand gives more specific measurementrnofrndelinquency and defaultrntimeframes. </p

The data sample used to build thernVantageScore 3.0 modelrnwas developed on consumer behavior from two different two-year timeframes: 2009-2011 (during the economic crisis) and 2010-2012.rnEach performance timeframe contributed 50 percent ofrnthernmodel’s development.  This reduces the model’s sensitivity to consumer behavioral shifts over differentrnvolatile periods.  The model also sets negative information tornneutral if it is coded as occurring during a natural disaster but allowsrnpositive information to retain its positive impact.</p

As part ofrnthe product launch VantageScore Solutions has introduce a consumer orientedrnwebsite, www.ReasonCode.org.  The site provides a primer on what reason codes arernandrnhow they are used,rnsearchable and interactive reason code definitionsrnandrnexplanations,rnand a glossary of common reason codernterms

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

See all blogs
Share

Comments

Leave a Comment

Leave a Reply

Latest Articles

Real Estate Investors Skip Paying Loans While Raising Billions

By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

Late-Stage Delinquencies are Surging

Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

Published by the Federal Reserve Bank of San Francisco

It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...