Taking the sting out of less data for credit scores

April 5, 2017

In a move that might prevent auto lending from hitting a speed bump, VantageScore Solutions has developed a new generation of its credit-scoring model.

With changes coming July 1 that limit what consumer information credit bureaus can examine and monitor, concerns have grown whether credit scores might become more rosy and less reliable — which in turn might prompt skittish lenders to pull back from auto loans, at least until they become comfortable with the new scores.

VantageScore 4.0, the company’s revised scoring model, incorporates those July 1 changes. It aims to ensure that lenders can be more, not less, confident in their forecasts of delinquencies and such.

In addition, the changes make it easier for lenders to see scores for consumers with sparse credit files.

The 4.0 model, available this fall, includes so-called trended data, which looks at changes over time, from consumer credit files for 2014-16. VantageScore 4.0 has value for the auto industry in particular because it provides a fresher time frame and trended data, and it is less dependent on public record information, Davies said. …

In internal testing ahead of the launch, the predictability of the performance of auto originations that used VantageScore 4.0 improved 2.9 percent compared with those that used VantageScore 3.0, Davies said. The predictability of existing accounts’ performance improved 1.5 percent under VantageScore 4.0.

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