STAMFORD, Conn.--(VantageScore Solutions, LLC, the company behind the VantageScore® credit scoring model, announced today that its consumer credit score model has been included in a number of solutions aimed at empowering industry participants in the residential mortgage backed security (RMBS)market to make more informed investment decisions.)--
“While the model has been used in the auto and credit card market for years, the largest and most sophisticated players in the RMBS market are now also turning to VantageScore and these market solutions to help them more accurately price and benchmark deals”
Seeking a fresh perspective on risk, pricing and transparency, approximately 46 investors ranging from the world’s largest asset managers to strategically focused hedge funds are now using VantageScore® in their risk and pricing models to drive decision making. Specifically, VantageScore is being used by institutional investors that are utilizing the new availability to track “loan level data” to gauge risk on an on-going basis.
Previously, it was difficult for market participants to analyze RMBS issuance using data beyond that which was compiled when a loan was originated. Recent breakthroughs now allow investors to use more current indicators, including continually updated VantageScore credit scores, to more accurately price and compare securities, and to monitor default risk. All data is anonymous to protect the borrowers’ privacy.
Equifax, one of the national credit reporting companies, recently reported that as part of its ABS Credit Risk Insight suite of solutions including Credit Risk Insight Pre-Bid, Post-Bid and Surveillance, investors may use up-to-date VantageScore credit scores as a leading indicator of mortgage default and as a tool for improved risk management.
TransUnion, one of the other national credit reporting companies, and CoreLogic® have anonymously matched Consumer Risk Indicators, including VantageScore, with a high degree of quality to the LoanPerformance Securities Database, which is the mortgage industry’s largest repository of non agency mortgage-backed securities (MBS) and asset-backed securities (ABS) data.
“While the model has been used in the auto and credit card market for years, the largest and most sophisticated players in the RMBS market are now also turning to VantageScore and these market solutions to help them more accurately price and benchmark deals,” said Barrett Burns, president and CEO of VantageScore Solutions. “Investors are adopting the VantageScore model so that they can better understand portfolio risk and borrower credit, which will no doubt help support a recovery for the market.”
The VantageScore credit scoring model is used to make billions of decisions annually by numerous lenders within their production systems, including four of the top five financial institutions, the top five credit card issuers, two of the top five auto lenders, and recently of the country’s largest mortgage lenders. Media reports disclosed that banking giant Chase adopted VantageScore in January of 2011. Secondary market participants including Fitch and S&P are also calibrated to rate mortgage backed securities when the underlying loans have been scored using the VantageScore model.
About VantageScore Solutions
Stamford, Conn.-based VantageScore Solutions, LLC (www.vantagescore.com) is an independently managed company that holds the intellectual property rights to VantageScore, a generic scoring model introduced in March 2006. Created by America’s three major credit reporting companies (CRCs) — Equifax, Experian and TransUnion — VantageScore’s highly predictive model uses an innovative, patented and patent-pending scoring methodology to provide lenders and consumers with more consistent credit scores across all three major credit reporting companies and the ability to score more people.