Research Shows Widespread Use of VantageScore Credit Scores by Major Lenders for Credit Decisions
STAMFORD, CT–(Marketwired – January 10, 2018) – VantageScore Solutions, LLC, developer of the VantageScore® credit scoring models, today released the results of a study from Oliver Wyman, a global leader in management consulting, that examined the extent to which VantageScore credit scores were used by market participants.
The study reviewed a 12-month time period between July 2016 and June 2017, and examined the usage of VantageScore credit scores based on two dimensions: (1) usage by market participant type (i.e., credit card issuer, auto lender, institutional investor, Direct-to-Consumer websites, etc.), and (2) usage by function (i.e., pre-screen, origination/underwriting, portfolio management, consumer disclosure/credit monitoring).
Oliver Wyman’s findings dispel the misconception that the increase in the use of VantageScore credit scores is being driven principally by providing consumers with free VantageScore credit scores for credit monitoring purposes.
While providing free credit scores to consumers is an area of the market that VantageScore is proud to have helped pioneer, the report found almost 75 percent of the more than 8.5 billion VantageScore credit scores used during the research time period were used by lenders.
“Credit scores have evolved from an instrument used behind the curtain to help lenders automate underwriting into a ubiquitous consumer tool, which is why we are particularly pleased to provide a greater amount of information about where and how VantageScore credit scores are being used,” said Barrett Burns, president and CEO of VantageScore Solutions. “This report underscores that lenders support competition, and use VantageScore for credit decisions together alongside many other different types of data and other models. The wide industry usage of VantageScore also speaks to the depth of lender testing of the VantageScore, which is an indication that competition is raising the bar for all model developers to build more predictive and inclusive credit scoring models.”
The Oliver Wyman report found that industry usage of the VantageScore model is widespread. Among the findings were that:
- There are more than 2,700 unique users of VantageScore credit scores.
- Overall, more than 2,200 financial institutions used more than 6 billion VantageScore credit scores.
- Consumer and personal lenders, many of which are so-called “marketplace lenders,” used a total of approximately 750 million VantageScore credit scores.
- The non-lender category, such as tenant screening, telecommunications, and utility companies, accounted for more than 750 million of the VantageScore credit scores used.
- VantageScore is a data point used by investment firms as part of their investment decision-making (i.e., to analyze bonds backed by pools of loans for stress testing and valuation purposes).
Oliver Wyman found that credit card issuers were by far the largest users of VantageScore credit scores. The report found that:
- Of the 6.4 billion VantageScore credit scores used by financial institutions, credit card issuers used approximately 4.9 billion.
- Among credit card issuers, pre-screening and portfolio management (e.g., credit line increase/decrease decisions, risk assessment of portfolio, loss forecasting, etc.) represented the largest volume of uses.
“Lenders use credit scores in many different ways, often together with other inputs, including other credit scoring models. Our study confirms that VantageScore credit scores were used in significant volumes, throughout the entire lifecycle of consumer lending and across every relevant category except mortgage originations,” said Peter Carroll, partner at Oliver Wyman. “We found a significant number of credit scores used specifically in the origination of new loans, which contradicts the idea that lenders use only one brand of credit score to make lending decisions.”
About VantageScore Solutions
Credit scores can impact many aspects of your life, everything from whether you are able to get a loan and how much interest you will have to pay to whether you are able to rent an apartment.
VantageScore Solutions, LLC (www.VantageScore.com) is the independently managed company that owns the intellectual property rights to the VantageScore credit scoring models and is the leader in scoring innovation. Recently introduced VantageScore models score an additional 30-35 million consumers* who typically are not scored by conventional models – without sacrificing predictiveness. VantageScore credit scores are used by lenders, landlords, utility companies, telecom companies, and many others to determine your creditworthiness. By using the VantageScore model, these enterprises have access to many more consumers, and in turn, consumers have greater access to mainstream credit.
While there are many credit scoring models in the industry, the “win-win” for VantageScore is its innovative, highly predictive, patent-protected, tri-bureau scoring methodology that provides lenders and consumers with more consistent credit scores across all three national credit reporting companies. VantageScore is also the model tens of millions of consumers use to monitor their credit behaviors through dozens of websites and lenders who provide their users and customers with their credit scores.
The company is celebrating its 12th anniversary in 2018.
* Reduction in public records and collection trade lines in consumers’ files will cause the number of consumers who would be newly scoreable using the VantageScore credit scoring model to decline.