Time to Sharpen Our Pencils

Date: April 01, 2019

“Time to sharpen our pencils.”

That was one of the key messages from Dr. Emre Sahingur, VantageScore Solutions’ Senior Vice President of Predictive Analytics, at a standing-room-only breakfast presentation at CBA LIVE, the annual meeting and conference of the Consumer Bankers Association (CBA).

We are proud, longtime sponsors of the CBA. Many of its members are users of our credit scores.

Emre’s message keyed in on the fact that while recent years have been kind to the consumer lending industry, it would be wise to acknowledge the possible headwinds the industry is likely to be facing in the future.

Americans are carrying more consumer debt than ever before, with non-mortgage debt expected to top $4 trillion in 2019 and mortgage debt to exceed $10 trillion.

Credit card balances continue to grow; having surpassed $1 trillion in 2018. Unsecured personal loans have shown a significant resurgence, with balances estimated to be around $160 billion by the end of 2019.

While new originations have been healthy, we also have observed that originations have been moving toward riskier segments in recent periods, and that trend is expected to continue.

The impact of new competition from FinTechs is another important factor. I attended the Marketplace Lending Association CEO meeting in Washington, D.C., and came away highly impressed with their ability to nimbly adopt new underwriting and platform approaches.

As of late 2017, FinTechs had about 30% of the market, up from 3% just 5 years ago.

Such offers have become a significant alternative to credit cards, for debt consolidation or other purposes, with millennials being an obvious target.

And then there’s the possibility of a cycle change. It is not a question of “if.” It’s a question of “when” the next credit downturn will occur.

In this environment, lenders need to focus on credit quality, find safe and profitable business opportunities and have the ability to respond to changes in credit use behaviors.

As Emre stated during his CBA LIVE presentation, the key to remaining competitive in this environment will be to use better data and predictive analytics to target the best borrowers and fine-tune credit decisions. Emre closed with a question that I posit to you:

Are your current risk assessment tools addressing these needs and realities?

VantageScore 4.0 scores more consumers with greater accuracy. The model expands a lender’s universe of borrowers and fine-tunes lending decisions with trended credit data.

We’d be happy to provide the proof. Just ask!


Barrett Burns

CEO and President, VantageScore Solutions

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