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VantageScore releases new credit-scoring model

VantageScore has released a pilot of its latest credit-scoring model, VantageScore 4 Plus, for banks, fintechs and government lenders.

The new model combines alternate open banking data with traditional credit data, which it claims gives lenders a “substantial predictive lift of up to 10% compared to the industry leading VantageScore 4.0 credit score, which itself has up to an 8% lift over conventional scoring models.”

VantageScore said its new pilot is compatible with all major aggregator advanced programming interfaces (APIs) and works for any credit report from Experian, Equifax or TransUnion. The pilot model uses the same scoring range as VantageScore 4.0 (300 to 850) and also uses score-to-odds ratios, meaning that most lenders will not need to adjust their credit or lending policies to use the new pilot program.

The San Francisco-based credit scoring and analytics company says that VantageScore 4 Plus creates “new opportunities for lenders to reduce the risk of opening new lines of credit while maintaining new lending growth with customers who would not have been approved for credit previously.” This includes recent immigrants and the those without bank accounts.

The new pilot also enables lenders to see trends in consumer distress months before their credit file shows it, VantageScore explained. Similarly, consumers can share a more complete view of their finances and ability to manage their financial obligations, which increases their chances of approval for credit cards, personal loans, mortgages and auto loans, the firm said.

“As the fastest growing credit scoring company in the U.S., with over 42% growth in 2023 and 27 billion credit scores used per year, lenders are recognizing the innovation and predictive power of VantageScore credit scores,” Silvio Tavares, VantageScore president and CEO, said in a statement.

In February, the Federal Housing Finance Agency (FHFA) announced that the transition to new credit-score requirements is expected to begin in the fourth quarter of 2025. That’s when the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac will acquire single-family loans based on the FICO 10T and VantageScore 4.0 credit models, replacing the Classic FICO score that has been in place for decades.

The GSEs will also transition from a tri-merge system to a bi-merge system at that time, which has been opposed by TransUnion and is a talking point for mortgage industry trade groups, which say that significant operational complexities still need to be worked out.

Credit reports have become much more expensive over the past two years. In 2024, FICO is charging one price — higher than last year’s price — to all mortgage lenders, independent of their volumes, in a departure from the tier-based pricing structure it implemented in early 2023. It’s also collecting the same per-score price for soft pulls and hard pulls, an initiative that started in 2023 despite significant differences in these products.

High costs have accelerated the transitions by some lenders to new credit models for several products, mainly those outside of the GSE space. The list includes lenders such as Movement MortgageCrossCountry Mortgage and Premier Lending

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