New VantageScore® Data Tool Enables Precise Measurement of Credit Risk Over Time

RiskRatio Powered by VantageScore™  Quantifies the Relationship Between VantageScore Credit Scores and the Risk of Default

SAN FRANCISCO, Sept. 15, 2022 /PRNewswire/ -- A common misunderstanding about credit scores is that the risk associated with any particular score is static. In reality, the risk associated with a score shifts over time due to various factors including macro-economic changes and how consumers handle various types of credit products.

The dynamic relationship between VantageScore credit scores and default risk is particularly critical for industry stakeholders to understand in today's economic environment where consumers face inflation, a potential extended recession, and other possible economic challenges.

To meet this need, VantageScore has launched a first-of-its-kind tool called RiskRatio that provides lenders and those in the capital markets the ability to view and refresh the relationship between credit scores and default rates (measured by delinquency of 90 days or more over a 24-month period) at different points in time for originations as well as existing accounts.

"The launch of RiskRatio continues VantageScore's long-standing history of demonstrating and promoting transparency and aiding in model governance," said Silvio Tavares, President & CEO of VantageScore. "For users of our credit scores, which include more than 3,000 companies including nine of the top 10 largest banks and many of the largest institutional investors, RiskRatio offers the ability to understand how scores relate to portfolio risk and the economic environment."

As an example, by using the tool, stakeholders can see that consumers in the near prime 621-640 credit score band had a 55% decrease in default risk when comparing the sample population from March 2009 (stress period) to March 2020 over the 24-month performance window in each time period. This information provides stakeholders important insights to help manage their portfolio risk. 

Other key features of the tool include:

• TRANSPARENCY: Provides clarity around predictive performance of VantageScore credit scores over time for new originations and existing accounts.
• RELEVANCE: Conveys an understanding of default rates corresponding to each score band by credit product not previously available.
• EASY ACCESS: Is a publicly- available tool that stakeholders can use to review the data and gain valuable insights without cost and without providing personal information.

For more information visit: https://vantagescore.com/lenders/risk-ratio/

VantageScore Solutions develops consumer credit scoring models that combine the need for both financial inclusivity and dependable predictiveness across all scoring ranges. Known as an industry thought leader, the company's most recent models score approximately 96 percent of all adults 18 and older – including 37 million more people than conventional models – without sacrificing safety and soundness. As a result, lenders using VantageScore can extend credit to those who have been historically marginalized, including minority and lower-to-middle income Americans. VantageScore credit scores are used by thousands of lenders, landlords, utility companies, telecom companies, and many others to determine creditworthiness. Additionally, tens of millions of consumers rely on free access to their VantageScore credit scores to monitor their own creditworthiness.

VantageScore Solutions was launched in 2006 and is owned by America's three national credit reporting companies (CRCs) – Equifax, Experian, and TransUnion. Using a patent-protected tri-bureau methodology, VantageScore delivers time-tested, innovative, and more consistent credit scoring models across all three CRCs.

SOURCE VantageScore