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VantageScore: a rival credit score

We do know at a high level that four of the top five financial institutions are using us. Five of the top five credit card issuers are using us, two of the top five auto (lenders). And then we just broke into the mortgage industry with one major lender. We have hundreds and hundreds of lenders, but that's the big guys.

QuestionHow does VantageScore capture consumers with thin files?

Answer There are lots of numbers thrown around about how many may be considered unscore-able -- somewhere between 35 (million) and 50 million, that seems to be the number in vogue. It's a big number that's … generally being blocked from mainstream credit. I say generally because some could get manually underwritten.

So, for thin files -- they typically have few trade lines -- like under three. So, we score those, and we score them very effectively. Especially when they first start using credit and then if they haven't used credit for six months, we still score it.

We knew that even though rent wasn't being reported at the time, we knew by the end of (2005) that rent data were highly predictive. So, we plugged that ability to score it into the algorithm. We do know other major models don't score rent payment. But it's important to score those payments for the obvious reason because it's a high percentage of a renter's liabilities, and they ought to get the benefit of making those payments on time (and) be rewarded for that.

Most renters tend to be thin file -- I can't prove that mathematically -- but they are starting out in life and so forth. And I also have to believe that will really help first-time homeowners if they want to be a homeowner by scoring their rent.

QuestionDoes VantageScore consider authorized user accounts?

Answer VantageScore 2.0 does. Originally, we had excluded it in the beginning with (version) 1.0. The reason we did was because there were a lot of nefarious websites coming up that were enticing people to sell the ability to put someone on as an authorized user, so we excluded it. Those websites disappeared. So, once that happened, then we became comfortable with putting authorized users as an option back into version 1.0, and we do have it in 2.0. The risk went away.

QuestionVantageScore says it provides greater accuracy and consistency for the full-file consumer. How is that?

Answer I'm glad you asked that question because we don't want to be confused with what is often called an alternative credit score or credit-scoring model that only scores "alternative data." We actually don't use the word alternative data anymore because what is typically defined as alternative data like rent payments, utilities, is to us mainstream credit.

But we also of course score thick-file people as well -- that would be the larger part of the population. On the consumer side, we score more people and more accurately. On the lender side, it gives the lender … a larger pool of score-able people. They can get more potential borrowers through the door, as the phrase goes, without lowering their credit standards.

QuestionHow can a consumer see their VantageScore credit score?

Answer Both TransUnion and Experian offer the VantageScore to consumers on their websites.

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