Adopting a new credit-scoring model can help lenders identify more potential loan candidates, better assess risk within their portfolios, and more accurately evaluate new loan applications.
The latest white paper from the VantageScore analytics team, Implementing a new Credit Score in Lender Strategies, provides detailed step-by-step guidance on converting to a new scoring model and optimizing the use of its scores within a variety of lender strategies.
As outlined in the graphic below, the paper lays out three potential levels of conversion process. The simplest, “Plug & Play,” entails relatively straightforward replacement of an incumbent set of scores (called “OldScore” within the paper) with an updated set of scores (“NewScore”). The most complex requires a full re-design and re-optimization of the strategy.
As explained in the paper, the appropriate conversion process for a given lender and strategy is determined by the degrees of similarity in default rate and population distribution when a population is scored by both OldScore and NewScore.
Available for download at VantageScore.com, Implementing a new Credit Score in Lender Strategies builds on information provided in an earlier white paper, Model Conversion 1: Plug & Play, and in the VantageScore Model Conversion and Implementation Webcast series.