Frequently Asked Questions: VantageScore 4.0
When will VantageScore 4.0 be available and how do I install it into my processes?
VantageScore 4.0 is currently installed and operationally available to lenders. The three national credit reporting companies (CRCs)—Equifax, Experian and TransUnion—jointly own VantageScore Solutions and they sell the scores, so lenders and other users of credit scores should work with their CRC relationship managers to implement the new model into their processes.
To understand how to implement a new scoring model, view our webinars.
Has VantageScore 4.0 been acknowledged by regulators?
VantageScore has met with federal regulators regarding VantageScore 4.0. A number of regulators, including the CFPB, the OCC, FDIC and the Federal Reserve Board, are all aware of VantageScore 4.0 and its features and benefits.
Moreover, considering its treatment of NCAP-related data, VantageScore 4.0 provides value-added governance features and is more consumer-friendly.
Has VantageScore 4.0 been tested?
Yes, and VantageScore 4.0 was found to be more predictive than our previous model, VantageScore 3.0, which itself still remains highly predictive.
As a lender, do I have to use all three CRC scores as a “tri-merge”?
No, VantageScore 4.0 falls into the “generic credit scoring model” category, thus a single score from one bureau can be pulled and used independent of the other two.
Is this really the first and only credit score model that features innovations such as being NCAP-aligned or to use trended credit data?
It is important to distinguish VantageScore 4.0 from other types of credit scoring models. VantageScore Solutions develops only generic “tri-bureau” credit scoring models, built on a general (random) sample of the population of consumers with credit files. VantageScore models can be used across all three national consumer credit reporting companies, within all consumer credit categories (credit card, auto, mortgage, etc.) and across all functions where a lender requires a credit score.
VantageScore 4.0 is the first and only generic tri-bureau model built with negative data suppression (NCAP) in mind and the first to incorporate trended credit data and machine learning techniques. These innovations, together with VantageScore’s signature consistency, predictiveness and inclusiveness, make implementation easier for lenders.
Will VantageScore’s earlier models still be supported?
Earlier models introduced by VantageScore will continue to be supported. Lenders, however, are encouraged to validate and upgrade to newer VantageScore models, which are now more predictive, transparent and inclusive, especially in light of data suppression associated with NCAP.
When will the NCAP changes take place?
The new standards for tax liens and public records became effective in 2017.
Will VantageScore 4.0 be accepted in the mortgage market and how will its introduction impact efforts to introduce credit-scoring competition in that market?
Currently, Fannie Mae and Freddie Mac still require the use of outdated FICO models in their seller service guidelines. VantageScore has been leading an effort to work with both GSEs and their regulator, the Federal Housing Finance Agency (FHFA), to allow mortgage lenders to benefit from competition by having the option to choose newer models that have been introduced by either VantageScore or FICO.
FHFA is still evaluating this issue. We expect the introduction of VantageScore 4.0 will strengthen the case for lender choice among credit score models. This is because VantageScore 4.0 is the only generic tri-bureau credit score model to incorporate trended credit data, which was recently required by Fannie Mae. In addition, VantageScore 4.0 delivers a highly accurate credit score to those consumers who are conventionally unscoreable and thus locked out of most automated underwriting systems.
As it stands, FHFA and the GSEs are examining the feasibility of allowing multiple competing models allowing for lender choice and are focusing on the systemic implications and operational challenges of doing so. This is a necessary process, no matter which models are ultimately deemed to be eligible for lender use.