Myths and misconceptions about the VantageScore model and credit scores in general have existed and been perpetuated over time. Clearing up these myths is important for the industry as well as for consumers.
Myth: Other generic credit scoring models can score as many consumers as VantageScore 3.0.
Reality: Specialty scoring models have recently been introduced to compete with VantageScore 3.0. These models generate scores using data from sources other than the credit files maintained by the three national credit reporting companies (CRCs—Equifax, Experian and TransUnion). This data may not be subject to the regulatory standards imposed on the CRCs by the Fair Credit Reporting Act (FCRA), and its use can increase the cost and complexity of model implementation.
Furthermore, these models are typically intended to supplement generic models, not replace them. That means their use can entail extra licensing costs, and a need to integrate additional score(s) into automated processes and workflows. By contrast, the standalone VantageScore model, using only FCRA-regulated credit-file data, can generate highly accurate scores for 30-35 million consumers who cannot be scored by competing generic models. This includes 7.6 million consumers who have scores above 620. Use of VantageScore represents an opportunity for lenders to expand their applicant pool without lowering standards and serve more minorities consumers.
For more information, read our white paper on universe expansion.
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