21
Journal
DO ALTERNATIVE
CREDIT SCORING
MODELS MATTER?
Competition ensures a healthy and
productive market. Credit scores are no
exception.
A new study commissioned by
VantageScore Solutions, a consortium of the
three credit bureaus (Equifax, Experian, and
TransUnion), found that institutional investors
with exposure to asset-backed securities (ABS)
and residential mortgage-backed securities
(RMBS) are supportive of competitive credit
scoring methodologies and desire more
transparency and inclusivity among credit
scoring models used to underwrite the loans
that collateralize the securities they purchase.
Specifically, the survey which included
qualitative and quantitative research
representing the views of a sum aggregate
of $47 trillion in assets under management
(AUM), revealed that:
» Investors Want Alternative Scoring
Models: 93% of investors are open to
considering alternatives to conventional
scoring methodologies, with a similar level
of support from those who focus on ABS
and RMBS specifically (91%).
» Investors Demand Financially Inclusive
Credit Scoring: 85% of investors noted the
importance of the development of models
that are more inclusive and incorporate
methodologies that will enable the
inclusion of the majority of the underserved
communities across the U.S.
» More Transparency Is Key: 58% agree
greater transparency around how credit
scores are calculated would be helpful.
» ESG Is Critical: Investors believe
Environmental Social Governance (ESG)
already plays an important role in investor
decisioning with 76% expecting this
phenomenon to continue in the future.
"is research shows that investors want
credit scores to keep pace with demographic
shifts and advances in technology and data
innovation—without lowering risk standards,"
said Silvio Tavares, President & CEO of
VantageScore. "ere is clearly demand to move
away from the status quo with an emphasis on
increased inclusivity and transparency."
