Credit Scoring and Financial Inclusion whitepaper


Date: November 29, 2021

Increasing financial inclusion and equity is a key area of focus in the financial services industry, particularly in the aftermath of the COVID-19 pandemic which exacerbated the economic gaps faced by many disadvantaged communities. Lenders are examining systems and processes to better serve those consumers who may be fully capable of borrowing and re-paying within their means but in the past have had limited or no access to mainstream credit because of outdated and unnecessarily restrictive credit scoring models, systems and processes. Fair lending enforcement is being highlighted as a priority for financial services regulators as well.

Since its inception in 2006, VantageScore Solutions, LLC (VantageScore) has developed models which generate the most accurate credit score for as large a percentage of consumers as possible, which in an increasingly automated industry is a critical step towards expanding consumers’ access to credit. VantageScore has been able to accomplish this objective using the same credit data as conventional scoring models1 but applying more modern, patented modeling methodologies that can more effectively use the available data for consumers who may have more limited activity reported in their credit files. Rigorous testing performed during model development and on an ongoing basis show that the scores provided for these newly scoreable consumers provide an accurate estimate of their likelihood of defaulting on a debt obligation.

More recently VantageScore 4.0, the company’s latest model, allows lenders to accurately evaluate approximately 37 million more consumers than conventional models. This allows consumers who have been historically marginalized to now gain access to credit and creates a corresponding financial inclusion opportunity for lenders, all in a safe and sound way.

In this research study, gain a better understanding of the credit invisible consumers (both demographically and geographically), how to reach them and the importance of providing a fair and accurate assessment of credit risk that will allow a higher number of consumers the opportunity to enter mainstream credit markets and begin to establish their credit.

More Insights & Resources

See all the performance data and insights on VantageScore’s advantage in the credit card industry.

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