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Exclusionary Credit Score Modeling Limits Credit Access

 

Since the introduction of VantageScore 3.0 in 2013, annual model validations have affirmed the accuracy of the scores it generates, including those for the “expanded” population of approximately 30-35 million consumers who cannot be scored by traditional scoring models, otherwise known as the “unscoreables.”
To get a more detailed financial portrait of this expanded population, including roughly 7.6 million of those consumers whose scores of 620 or higher indicate a high degree of credit-worthiness, VantageScore Solutions studied five million anonymized credit files, supplemented with demographic and economic data. This enabled a comparison of expanded-population consumers to their traditionally scoreable counterparts on a variety of financial characteristics, including income, employment, debt, and general ability to afford mortgages in their geographic regions.
As detailed below, among consumers with similar VantageScore credit scores, traditionally scoreable consumers and those in the expanded population proved strikingly similar with respect to their suitability as borrowers. The findings underscore that it is possible to expand the credit eligible population without relaxing standards.
Nevertheless, the study also revealed a marked disparity in the amounts of revolving credit extended to each group, with the traditionally unscoreable group receiving significantly less credit than traditionally scoreable peers.

 

Since the introduction of VantageScore 3.0 in 2013, annual model validations have affirmed the accuracy of the scores it generates, including those for the “expanded” population of approximately 30-35 million consumers who cannot be scored by traditional scoring models, otherwise known as the “unscoreables.”

To get a more detailed financial portrait of this expanded population, including roughly 7.6 million of those consumers whose scores of 620 or higher indicate a high degree of creditworthiness, VantageScore Solutions studied five million anonymized credit files, supplemented with demographic and economic data. This enabled a comparison of expanded-population consumers to their traditionally scoreable counterparts on a variety of financial characteristics, including income, employment, debt, and general ability to afford mortgages in their geographic regions.

This study reveals that among consumers with similar VantageScore credit scores, traditionally scoreable consumers and those in the expanded population proved strikingly similar with respect to their suitability as borrowers. The findings underscore that it is possible to expand the credit eligible population without relaxing standards.

Nevertheless, the study also revealed a marked disparity in the amounts of revolving credit extended to each group, with the traditionally unscoreable group receiving significantly less credit than traditionally scoreable peers.

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Downloadable PDF summary

Full-color, at-a-glance overview of the paper’s findings, including demographic and financial background on the “unscoreable” population.

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