Examination uncovers how credit scores can be used as continued economic dislocation looms
Stamford, CT, May 20, 2020 – VantageScore Solutions, LLC, developer of the VantageScore credit score model, released today a whitepaper on the VantageScore credit score’s role in understanding consumer credit risk and the need to closely monitor the risk represented by a given credit score in an increasingly volatile economic environment.
VantageScore’s latest whitepaper “The Dynamic Relationship Between a Credit Score and Risk: How to Correctly Interpret a Credit Score During an Economic Downturn,” provides lenders and other users of credit scores transparent details about how the score-to-default risk
Some insights from the study are below:
“Credit scores are often improperly thought of as absolute predictors of whether a borrower will default on a loan,” said Barrett Burns, president and CEO of VantageScore Solutions. “In reality, a credit score is a representation of risk accomplished by rank ordering the scoreable consumer population based on who is least and most likely to default. Inherently, as the overall economy slows, the risk associated with scores will shift in accordance. By understanding this relationship, lenders can make better, safe and sound decisions while protecting consumers from becoming overleveraged.”
For more details from the “The Dynamic Relationship Between a Credit Score and Risk – How to Correctly Interpret a Credit Score During an Economic Downturn,” study, visit: www.VantageScore.com/ScoreRiskWP.