Celebrating a decade of disruption
Something went horribly right.
More on that in a second, but first, an earlier memory: It was back in 2006 when I first learned about VantageScore and the opportunity to take on the job as its president and CEO. Having spent more years than I would care to admit as a buyer of credit scores while I was working for some of the largest lenders in the country, I knew there were a lot more creditworthy borrowers out there than were currently being scored. I also knew the credit scoring industry was ripe for disruption and innovation—to the benefit of lenders and consumers alike.
And so it was, 10 years ago this month that we introduced our first model, VantageScore 1.0., and founded VantageScore Solutions, LLC.
Our launch introduced some much needed competition into a market dominated by a single, seemingly ubiquitous brand name: FICO. And the disruption began with our adoption of a new architectural approach and incorporation of alternative data. Our promise to lenders and consumers: greater predictiveness, more consistent scores across the three national credit bureaus, and the ability to score more people.
It was only a few years later that the Great Recession pounced on the consumer. Ethnically diverse populations were particularly impacted. Lenders took it on the chin as well. We responded in October 2010 by introducing VantageScore 2.0, which used a blended timeframe of consumer credit information to ensure the model stood firm against the volatility of that era.
I must admit that throughout the first seven years of VantageScore’s history, including the launches of those two models, I was dissatisfied with the level of adoption. We were gaining traction, but not enough in my mind. A slow market response was frustrating, if understandable: Having come out of a Recession amid tremendous regulatory upheaval, lenders had a lot on their plates. Ripping out and replacing their credit scoring models was lower on the list of priorities than say, understanding the implications of a brand new regulator in the Consumer Finance Protection Bureau (CFPB).
Against this backdrop in 2013, we introduced VantageScore 3.0 with even more advanced techniques, including the elimination of paid medical collection accounts. VantageScore 3.0 also had the ability to generate a highly accurate score for 98 percent of consumers who had at least one credit file at the national credit reporting companies (CRCs). We also repositioned the VantageScore brand and launched a new logo and website. We streamlined our reason codes, launched the ReasonCode.org website, and added a number of other consumer-friendly features to the model and our educational materials.
Yes, then something went horribly right: Quite literally, VantageScore 3.0 became “the credit score everyone was talking about.” The timing and the modeling approach struck a chord with lenders and adoption surged. This past year over 6 billion VantageScore credit scores were used by over 2000 lenders and other users of credit scores. What’s more, tens of millions of consumers began receiving VantageScore credit scores for free through innovative fintech startups.
Moreover, the modeling approaches and technical advances we pioneered have been incorporated into subsequently built models introduced by our competitor. Competition raised the bar for all of us.
On the occasion of our tenth anniversary, there are a few that deserve to be recognized.
Thank you to the lenders that adopted VantageScore for your refusal to accept the status quo.
Thank you to the VantageScore team for your brilliance, innovation, dedication and entrepreneurial spirit.
Thank you to our members Equifax, Experian and TransUnion for supporting us through the years.
Thank you to the many consumer advocates, trade groups and other third parties for their support and evangelism.
And thank you for reading our newsletter all these many months. I’m sure you will enjoy the anniversary-related content that follows.
Here’s to competition and another successful decade.