US-based credit scoring company VantageScore has expanded its ‘VantageScore 4Plus’ pilot program for lenders, which it launched last year in partnership with national non-profit network Credit Builders Alliance.
The ‘VantageScore 4Plus’ credit score model enabled access to Open Banking data to help underserved borrowers get access to credit.
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.
Applicants with new-to-credit, thin or inactive credit files comprised 15% of the participants in the pilot program and were found to have benefited “significantly” from the addition of Open Banking data.
The use of Open Banking data provided clearer risk segmentation, with nearly equal numbers of consumers seeing increases and decreases in their credit score during the pilot.
Using ‘VantageScore 4Plus’, 44% of previously declined applicants could be “reconsidered” under what VantageScore called a “second look” strategy.
“Our collaboration gives non-profit lenders access to modern, high-quality credit scores, equipping them to better serve their communities, while maintaining sound lending practices,” said Dara Duguay, chief executive officer of Credit Builders Alliance.
“When you add real-time, permissioned data to the credit decisioning process, you not only improve predictive performance, you also create more opportunities for expanding responsible access to credit.”
Andrada Pacheco, executive vice president and chief data scientist at VantageScore, added: “Non-profit lenders need tools that are both inclusive and predictive.
“This initiative validates the idea that when enhancing credit file with cash flow data, lenders can expand credit access responsibly without incurring additional losses.”
More than 3,400 US institutions, including eight of the top 10 banks, use VantageScore credit scores to provide consumer credit products, while the VantageScore 4.0 credit scoring model scores 33 million more people than traditional models.
VantageScore is an independently managed joint venture company of the three nationwide consumer reporting agencies – Equifax, Experian, and TransUnion.
Further reading: VantageScore CEO hails ‘new era’ of credit scoring with Open Banking data
