Its VantageScore 3.0 model uses a 300 to 850 valuation scale and higher predictive accuracy. The new and expanded scoring scale enables lender and servicer users to formulate a score for 27 million to 30 million previously unscoreable consumers.
According to the Stamford, Conn.-based company whose generic credit scoring model has been used by the financial services industry since March 2006, VantageScore 3.0 provides “up to 25% predictive improvement over earlier models.”
The new and inclusive approach, said Barrett Burns, president and CEO of VantageScore Solutions, was deemed necessary in today’s competitive lending environment that “dictates that lenders need access to as many creditworthy consumers as possible within their target universe.”
The VantageScore 3.0 model is designed to facilitate lending risk management and data reporting for lenders and servicers, as well as ensure consumers can use information “to become better managers of their own credit,” Burns said. Hence, VantageScore 3.0 “is both a new model and new path forward” for the credit scoring industry.
Preliminary tests show VantageScore 3.0 offers highly predictive credit scoring across industries and applications, “in particular within the key prime and near-prime consumer populations,” executives said, thus enabling banks “to extend credit to tens of millions of consumers that were previously invisible to them.”
To aid lender implementation and consumer understanding VantageScore has also reduced the number of reason codes to less than 80 and simplified the language used.