VantageScore CEO hails ‘new era’ of credit scoring with Open Banking data

US-based VantageScore has released its latest credit scoring model ‘VantageScore 4plus’, which combines Open Banking data with traditional credit data to give lenders the ability to better assess consumers’ creditworthiness.

The new model is available for lenders, including banks, fintechs and government lenders, to pilot.

‘VantageScore 4plus’ is compatible with all major aggregator APIs and works for any credit report from Experian, TransUnion and Equifax.

By using bank data, ‘VantageScore 4plus’ sees evidence of “consumer distress” months before it appears on a credit file, VantageScore claimed, thereby enabling lenders to more accurately assess credit risk.

“At a time when delinquencies are reaching the highest levels we have seen in recent history, the need for a credit score that gives deeper insights into a member’s ability to pay back is critical,” said Yazel Pardo, head of credit risk at Patelco Credit Union.

“Through our testing of VantageScore 4plus, we’ve seen its ability to more accurately represent a consumer’s creditworthiness, helping Patelco increase its ability to lend to more members during these uncertain economic times.”

VantageScore’s latest model means lenders can offer credit to individuals who would not previously have been deemed creditworthy, including those without a current account and recent immigrants.

“By harnessing the power of alternative Open Banking data, ‘VantageScore 4plus’ is ushering in a new era of consumer credit scoring that is transformational for lenders,” said Silvio Tavares, president and chief executive officer of VantageScore.

According to Tavares, VantageScore is the fastest growing credit scoring company in the US, with growth in excess of 42% in 2023 and 27 billion credit scores used per year.

“The use of consumer-permissioned bank account data is a huge step forward in creating a credit score that is more predictive and reflective of a consumer’s full financial profile, helping them build their credit and gain access to mainstream financial products,” added Dara Duguay, chief executive officer of Credit Builders Alliance.