Credit scoring service VantageScore broadens its Open Banking pilot program
VantageScore 4Plus Expands to Improve Credit Access for Underserved Borrowers
The VantageScore 4Plus pilot program, launched in partnership with Credit Builders Alliance last year, has expanded to leverage Open Banking data and benefit underserved borrowers. This move allows lenders to access more inclusive and predictive credit information, thereby improving access to credit and mortgage opportunities for those traditionally underserved.
Andrada Pacheco, executive vice president and chief data scientist at VantageScore, emphasized the importance of adding real-time, permissioned data to the credit decisioning process. She stated that this enhancement improves predictive performance and creates more opportunities for expanding responsible access to credit.
Initial data from the pilot showed significant improvements in the ways non-profit lenders can assess and serve potential borrowers. Applicants with new-to-credit, thin or inactive credit files, comprising 15% of the participants, benefited significantly from the addition of Open Banking data.
The VantageScore 4.0 credit scoring model, which uses Open Banking data, scores 33 million more people than traditional models. This new approach provides clearer risk segmentation, with nearly equal numbers of consumers seeing increases and decreases in their credit score during the pilot.
Moreover, using VantageScore 4Plus, 44% of previously declined applicants could be reconsidered under what VantageScore calls a "second look" strategy. This strategy could potentially open up new opportunities for credit access for many individuals.
Dara Duguay, chief executive officer of Credit Builders Alliance, commented 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.
VantageScore is an independently managed joint venture company of the three nationwide consumer reporting agencies - Equifax, Experian, and TransUnion. The company's mission is to create and promote a more inclusive credit scoring system that benefits all consumers.
By leveraging innovative data sources, the expanded VantageScore 4Plus pilot program marks a critical step toward creating a fairer, more inclusive credit system that broadens access to financial products such as mortgages for underserved borrowers. Additionally, the use of Open Banking data uncovers creditworthy consumers overlooked by legacy models, enhances risk assessment for lenders, and supports community and training efforts through collaborations with organizations like Credit Builders Alliance.
- The VantageScore 4Plus pilot program, in collaboration with Credit Builders Alliance, has expanded to utilize Open Banking data, aiming to improve credit access for traditionally underserved borrowers.
- Andrada Pacheco, VantageScore's executive vice president and chief data scientist, asserts that incorporating real-time, permissioned data into credit decisioning boosts predictive performance and expands opportunities for responsible credit access.
- Initial data from the pilot demonstrated that non-profit lenders could assess and serve potential borrowers more effectively, with applicants who were new-to-credit, thin, or inactive benefiting significantly from the addition of Open Banking data.
- By using VantageScore 4Plus, lenders can leverage Open Banking data to provide modern, high-quality credit scores, supporting business strategies focused on financial inclusion and technology innovation.
