VantageScore Solutions, LLC, the company behind the VantageScore(R) credit score model, recently received a patent for the methodology behind its “Score Consistency Index,” which is a process that affords lenders the ability to measure the consistency of multiple generic credit score models across the three credit reporting companies (CRCs): Equifax, Experian and TransUnion.
Credit score models that provide widely inconsistent scores can increase the risk exposure for a lender. That risk exposure results in less attractive products and pricing, because consumers who receive such scores are potentially not being matched with the right types of credit and at the most appropriate terms. Inconsistent scores occur largely because other credit scoring models use a different algorithm for each CRC, and because of variations in the data reported by creditors and the timing of that reporting.
“It benefits lenders and consumers to have credit scores that are as consistent as possible,” said Barrett Burns, president and CEO of VantageScore Solutions. “We developed this measurement methodology so that lenders can understand whether inconsistent scoring is obscuring their true risk profile. It is readily available in the research section of our website for all to download and use.”
The VantageScore credit scoring model is used by numerous lenders, making billions of decisions annually, including four of the top five financial institutions, the top five credit card issuers, two of the top five auto lenders, and one of the country’s largest mortgage lenders. Recent media reports disclosed that banking giant Chase adopted VantageScore in January of 2011. Secondary market participants including Fitch and S&P also rate securitized loan package issues using the VantageScore model.
Source: VantageScore Solutions, LLC
