Capital Markets

Accurately track credit performance in real-time in the ABS and RMBS markets

VantageScore in the Capital Markets

VantageScore credit scores are often used by capital markets participants in both the consumer lending asset-backed securities market (ABS) and the residential mortgage-backed securities (RMBS) market.

Based on the 2019 VantageScore Market Adoption study by Oliver Wyman, investment firms also used VantageScore credit scores as part of their investment decision-making. For example, investors may use scores through third-party services to conduct loan level analysis for bonds backed by pools of loans for stress testing and for their buy, sell or hold valuation purposes

VantageScore Usage in Asset-Backed Securities

Consumer lenders such as credit card issuers, auto lenders and personal installment lenders use VantageScore to communicate to ratings agencies and investors the relative credit risk for securitized pools of loans.

Companies that have used VantageScore in this process have not been subject to credit enhancements or had negative ratings given by the credit ratings agencies that rate such asset-backed securities.

VantageScore Usage in Residential Mortgage-Backed Securities

In order to accurately analyze residential mortgage-backed securities (RMBS), many of the most sophisticated institutional investors leverage loan level data, including VantageScore credit scores, to assess risk.

Whereas, in the past only historical credit score data, i.e., a credit score calculated at the time of origination, was available, investors can now use VantageScore credit scores that are refreshed monthly to more precisely track credit performance in real-time. This allows a more accurate and timely assessment of a residential mortgage borrower’s risk profile and, in turn, better portfolio management.