VantageScore Unveils Credit-Scoring Model That Includes Alternative Open Banking Data

VantageScore unveiled a new credit-scoring model that uses both traditional credit data and alternative open banking data.

The combination gives lenders a predictive lift of up to 10% compared to the VantageScore 4.0 credit score, which itself gives an 8% lift over conventional scoring models, the company said in a Wednesday (May 15) press release.

The new credit-scoring model is called VantageScore 4plus and is now available for pilot by banks, FinTechs and government lenders, according to the release.

“By harnessing the power of alternative open banking data, VantageScore 4plus is ushering in a new era of consumer credit scoring that is transformational for lenders,” VantageScore President and CEO Silvio Tavares said in the release.

With the increased predictive power of VantageScore 4plus, lenders can reduce the risk of opening new lines of credit with customers who would not have been approved for credit previously, such as those who are not current account holders, are recent immigrants, or have not used credit products but have demonstrated positive cash management behaviors, according to the release.

VantageScore 4plus also sees trends in consumer distress months before the credit file, provides a credit score adjustment within seconds and adds an extra layer of protection against fraudulent loans, the release said.

The solution will be delivered through the three national credit reporting agencies and will support Fair Credit Reporting Act-compliant lending decisioning, per the release.

VantageScore is an independently managed joint venture company of the three national credit reporting agencies, Equifax, Experian and TransUnion, according to the release.

The firm’s new solution arrives at a time when delinquencies are climbing across all tiers of credit — and for a range of credit products, including mortgages, credit cards, personal loans and auto loans.

While the average American consumer remains “credit healthy,” some trouble spots are apparent, VantageScore reported in the February edition of its Credit Gauge.

In another development in the space, Experian said Thursday (May 9) that it launched a solution that uses open banking insights to further inform lending decisions and expand access to credit.

Experian’s Cashflow Attributes solution adds insights from checking and savings account information to traditional credit report data to help create a more detailed view of a consumer’s financial health and creditworthiness.