White Paper: Predictive Strength, Innovation behind VantageScore 4.0


Date: February 28, 2018

A new white paper demonstrates that VantageScore 4.0, the fourth generation VantageScore credit score model, is a model of great innovation. With VantageScore 4.0, risk modeling and assessment have taken a major step forward. The new model has three key innovations: the incorporation of CRC trended data, the application of machine learning techniques, and the alignment with recent changes in public records.

The white paper reviews in depth the following:

TRENDED CREDIT DATA

VantageScore 4.0 is the first and only tri-bureau credit scoring model to incorporate trended credit data, which is newly available from all three of the national credit reporting companies. Trended credit data reflect changes in consumers’ credit behaviors over time, in contrast to the static, individual credit-history records that have long been available in consumer credit files.

The VantageScore 4.0 model leverages this trended credit data to gain deeper insight into consumers’ borrowing and payment patterns, particularly among consumers in the Prime and Superprime credit-score bands.

MACHINE LEARNING

VantageScore 4.0 uses machine learning techniques to develop scorecards for consumers with limited credit histories (i.e., consumers who have scoreable trades but have not had an update to their credit file in the last six months). These consumers are not scored with other conventional models, which require a consumer to have a minimum of six months of credit history on the credit file or an update to their credit file at least once every six months.

Machine learning techniques were employed to develop multi-dimensional attributes that more effectively capture the behavioral nuances of consumers who have dormant data files. This technique yielded a 16.6 percent and 12.5 percent performance lift in the bankcard and auto originations categories, respectively, for those with dormant credit histories (i.e., consumers who have scoreable trades but have not had an update to their credit file in the last six months).

DATA SUPPRESSION

VantageScore 4.0 is also the first and only tri-bureau credit scoring model to be built in anticipation of the removal of and/or reduction in the public records and collection trades that have been proposed in the National Consumer Assistance Plan. VantageScore 4.0 has newly redesigned attributes related to public records to accommodate these shifts in volume while having the capacity to continue the consideration of public record information when it is included in a consumer’s credit file.

For more information on how VantageScore 4.0 delivers superior risk predictive performance across credit categories and across the population distribution, visit: https://www.vantagescore.com/VantageScore4WP.

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