Expansion of VantageScore's Open Banking credit score trial program announced
The US-based credit scoring company, VantageScore, has expanded its VantageScore 4Plus pilot program for lenders, a collaboration with the national non-profit network Credit Builders Alliance (CBA). This innovative partnership aims to create a more inclusive credit ecosystem by using Open Banking data to improve credit access for underserved borrowers [1][2].
Dara Duguay, CEO of Credit Builders Alliance, stated that the collaboration gives non-profit lenders access to modern, high-quality credit scores, enabling them to better serve their communities while maintaining sound lending practices [1]. The VantageScore 4Plus pilot program uses Open Banking data to incorporate more inclusive and predictive data sources beyond traditional credit file information [1][2].
VantageScore's executive vice president and chief data scientist, Andrada Pacheco, highlighted that adding real-time, permissioned data to the credit decisioning process improves predictive performance and creates more opportunities for expanding responsible access to credit [1]. Initial data from the pilot, which ran from September last year, has shown improvements in the ways non-profit lenders can assess and serve potential borrowers [1].
One of the key impacts of the VantageScore 4Plus pilot program is improved risk insights and lending decisions. By integrating Open Banking data such as banking transactions, income, and cash flow patterns, VantageScore 4Plus enhances the accuracy and fairness of credit scoring models for borrowers previously underserved by traditional credit scoring methods [2].
Another significant impact is expanded credit access. This innovation supports lenders in extending credit affordably to low- and moderate-income populations, including those with thin credit files or no credit history, which historically have faced barriers to obtaining credit [2].
The pilot program also supports housing affordability initiatives. Discussions and research connected to this pilot highlight benefits such as improved rent reporting, which can strengthen credit profiles for affordable housing applicants and renters, potentially increasing their access to mainstream credit markets [2].
CBA provides education and tools to lenders and community organizations to implement this enhanced scoring methodology effectively, ensuring broader adoption and impact [3]. Using 'VantageScore 4Plus', 44% of previously declined applicants could be "reconsidered" under what VantageScore called a "second look" strategy [1].
More than 3,400 US institutions, including eight of the top 10 banks, use VantageScore credit scores to provide consumer credit products [1]. The VantageScore 4.0 credit scoring model scores 33 million more people than traditional models [1]. Pacheco added that enhancing credit files with cash flow data allows lenders to expand credit access responsibly without incurring additional losses [1].
In conclusion, the VantageScore 4Plus pilot program, launched in partnership with Credit Builders Alliance, is a significant step towards reducing disparities in credit access and promoting economic opportunity for underserved communities [1][2][3].
For further reading, visit VantageScore CEO hails 'new era' of credit scoring with Open Banking data.
References: [1] VantageScore. (2022). Press Release: VantageScore Expands VantageScore 4Plus Pilot Program for Lenders. Retrieved from https://www.vantagescore.com/news/vantage-score-expands-vantage-score-4plus-pilot-program-for-lenders [2] Credit Builders Alliance. (2022). VantageScore 4Plus Pilot Program. Retrieved from https://www.creditbuildersalliance.org/vantage-score-4plus-pilot-program/ [3] Credit Builders Alliance. (2022). Resources for Lenders. Retrieved from https://www.creditbuildersalliance.org/resources-for-lenders/
Read also:
- UNEX EV, U Power's collaborator, inks LOI with Didi Mobility for the implementation of UOTTA battery-swapping vehicles in Mexico.
- Rapid growth observed in the German electric vehicle market - an explanation of the car flatting concept
- North America's Smart Meter Market Forecast 2025: Wave Two Rollouts Thrive, Accounting for 75% of Yearly Shipments by 2030 - According to ResearchAndMarkets.com
- Stratospheric Blockchain Network Launched by World Mobile and Protelindo
