Rebuilding the Lending Business with a More Assured Foundation

VantageScore has officially the confirmed that its newest credit-scoring model, VantageScore 4plus™, is now available for a pilot run with banks, fintechs and government lenders. According to certain reports, VantageScore 4plus leverages VantageScore’s pioneering and patented technology to combine the power of alternative open banking data with traditional credit data to give lenders a substantial predictive lift. Markedly enough, at launch, this lift settles around 10% compared to the industry leading VantageScore 4.0 credit score, which itself has up to an 8% lift over conventional scoring models. Anyway, the all-new VantageScore 4plus is already compatible with all major aggregator APIs and works for any credit report from Experian, Equifax or TransUnion. More on that would reveal how it uses the same scoring range as VantageScore 4.0 (300 to 850), while simultaneously boasting aligned score-to-odds ratios. In simpler terms, this means most lenders will not need to adjust their credit/lending policies to use the new VantageScore 4plus credit score. Talk about the whole value proposition on a slightly deeper level, we begin from the promise of advanced predictive power, which comes decked up with an ability to create new opportunities for lenders in reducing risks associated with opening new lines of credit. Not just that, the stated capability also helps you maintain new lending growth with customers who would not have been approved for credit previously. This includes even those who are not current account holders, recent immigrants, or the ones who have avoided using credit products but demonstrate positive cash management behaviors.

“At a time when delinquencies are reaching the highest levels we have seen in recent history, the need for a credit score that gives deeper insights into a member’s ability to pay back is critical,” said Yazel Pardo, Head of Credit Risk at Patelco Credit Union. “Through our testing of VantageScore 4plus, we’ve seen its ability to more accurately represent a consumer’s creditworthiness, helping Patelco increase its ability to lend to more members during these uncertain economic times.”

Next up, we must get into the way VantageScore 4plus can reduce risk among prime borrowers. Here, the solution uses comprehensive bank data to assess trends in consumer distress months before the credit file, thus manufacturing a more accurate picture of the present credit risk. Moving on to VantageScore 4plus’ financial inclusion capabilities, where it essentially empowers individuals to share a more complete view of their finances and their ability to effectively manage their financial obligations. Such a facility, like you can guess, should go a long way to bolster the applicant’s chance of being approved for mainstream loan products like credit cards, personal loans, mortgages, and auto loans.

Then, there is the prospect of real-time lending. Marking a move away from all those consumer-permissioned data solution that have limited applicability for lending because of how long they take to process things, the new technology provides score adjustment in real-time so to enhance decision-making. Complimenting the same is a straight adoption process. This translates to an ability, on the lender’s part, to more seamlessly utilize consumer-permissioned bank account information in their strategies. The stated feature makes for a much more convenient alternative than using attributes which require rebuilding models, credit policies and technology resources. Beyond its operational prowess, the product in question also banks upon the use of consumer-permissioned bank account data in VantageScore 4plus to install greater protection against fraudulent loans. Rounding up highlights for us is VantageScore 4plus’ compliance aspect, as the solution will be delivered through the three national credit reporting agencies, and at the time, it will also support fully FCRA compliant lending decisioning.