In March, VantageScore Solutions announced the launch of the VantageScore 3.0 model at CBA Live, the Consumer Bankers Association annual conference and expo.
The new model provides up to 25 percent predictive improvement over earlier models. It also has the ability to formulate scores for 30–35 million previously unscoreable consumers — a group larger than the population of Texas — without compromising accuracy or lending standards. The scale used in the new model is 300–850, a change from earlier VantageScore models.
The new model represents a new path forward for VantageScore Solutions and the credit scoring industry. The model was built with lenders’ implementation and risk management needs in mind, along with a deeper understanding for what information consumers need to become better managers of their own credit.
A key driver of the transformative improvement that VantageScore 3.0 delivers to lenders and consumers is more granular data from all three credit reporting companies (CRCs). The granularity of the data allowed model designers to select 150 of the most predictive characteristics from an estimated 900 behavioral characteristics that were tested. Further fueling the model’s ability to generate scores for millions of conventionally unscoreable consumers are innovative segmentation and modeling techniques, such as dedicating one of the models 13 internal scorecards specifically to those with minimal credit activity.
Also launched in conjunction with VantageScore 3.0 were YourVantageScore.com, a new website focused on consumers’ VantageScore credit scores, and ReasonCode.org, a microsite that provides deeper explanations of credit score reason codes. A key component of ReasonCode.org is a search engine that delivers additional information about each VantageScore reason code and tips for how to improve a consumer’s credit score.
The dramatic introduction of the VantageScore 3.0 model attracted extensive coverage from both industry and mainstream media. More than 80 local television nightly news programs shared the news with their viewers, and the model received positive coverage in major media outlets, such as The New York Times, American Banker, CNNMoney.com and Credit.com, among dozens of other news sources.
Credit.com took their interest in VantageScore 3.0 a step further and became the first website to provide its users with VantageScore 3.0 credit scores for free.
“We’re really proud to be able to offer this new credit score to consumers at no cost,” said Credit.com CEO Ian Cohen. “For tens of millions of consumers who were previously unscoreable, or had what is referred to in the industry as ‘thin files,’ this is a great opportunity for them to start building their credit histories and enter the mainstream earlier. It’s good for consumers and good for lenders to have competition in the market. It forces everyone to challenge old assumptions, such as the predictiveness of paid medical debt, and look for new ways to score consumers in a world that has changed a great deal since the 2008 recession.”
The personal finance and credit management website ReadyforZero.com also adopted the model.
“A single credit score is an important indicator of creditworthiness, but it’s never the complete story. We use the VantageScore 3.0 score as the leading indicator of a user’s overall credit health alongside progress toward their debt repayment goals,” said Rod Ebrahimi, CEO of ReadyforZero.com. “In this way, the VantageScore 3.0 model, in our opinion, is the ideal ‘creditworthiness barometer.’ Of course, there are hundreds of scores and models, but for our particular use case, we wanted something holistic that would serve as a reliable indicator into the future and help users understand how their specific actions on ReadyForZero can impact their creditworthiness over time.”