Trended credit data brings new accuracy and fairness to credit-scoring

Among the many new data sources becoming available, perhaps none hold greater promise for effective usage in the mainstream consumer credit industry than trended credit data. Trended credit data captures the trajectory of borrower behaviors over a period of time, as opposed to a snapshot of consumer behavior from the previous month.

Of course, readers of THE SCORE know that VantageScore 4.0 is the first and only tri-bureau credit scoring model to incorporate this data, and you can read here how it improves the score’s  predictive performance. Indeed, among Prime and Superprime consumers the use of these data contributes to predictive lift of up to 20 percent. This lift enables lenders to make even more finely-tuned credit offerings to these consumers.

Industry participants rightly want and need full transparency when it comes to incorporating trended credit data or using models that leverage it. In the spirit of that need, we will be diving deep into this subject in a whitepaper that will come out later this year.

But in the meantime, a little teaser…

Among the topics we will address in this white paper will be the extent to which trended credit data can impact the majority of consumers in the United States – and how. Moreover, what other opportunities exist if more trended credit data were to be reported?

To wit, there are approximately 155 million “conventional consumers” (i.e., consumers who meet a conventional scoring model’s minimum criteria of having at least one account that has been opened for a period of at least six months or has account activity that has been reported in the previous six months) with credit accounts whose trended data might not be fully reported.

If more trended data were available, that would impact approximately 123 million of those consumers.

More specifically, our data scientists found that:

  • 39% (or 48 million) of those consumers would see significant (20-point or more) changes in their current credit score;
  • 20% of those consumers would see an improvement in their credit scores;
  • 19% would see a decline in their credit scores;
  • Credit score improvements generally occur for consumers whose credit scores are less than 650 (representing 1 in 6 of those consumers). And as consumers’ credit scores increase, the improvement of their credit scores also increases;
  • Decreases in credit scores mainly occur in consumers whose scores are 750 and above.

In other words, lower-scoring consumers would likely see score improvements and lenders would be able to segment higher-scoring consumers even more accurately.

These are compelling insights and we’ll socialize this information proactively among key decision-makers to encourage greater reporting across all asset classes. In turn, this will help model builders build better and better models that recognize this data to increase scoring accuracy for the benefit of both lenders and borrowers for greater scoring accuracy!

And by the way, check out a trended credit data overview on American Banker here.

This month’s newsletter has some additional information about the power of trended credit data. We’re also posting the results of our annual model validation, the first of which that digs into how trended credit data continues to deliver predictive performance lift. As I mentioned at the beginning of this article, lenders rightly demand transparency and we are leading the way!



Barrett Burns

CEO and President, VantageScore Solutions

Borrowing habits:
Our parents versus us.

If we’ve learned anything over the last 10 years, we know there’s an app for almost anything. Weather, traffic, music, dinner reservations, transportation, maps, there’s little we can’t do with a tap of our fingers. The way we do things today differs greatly from how our parents did things when they were younger. This certainly includes how we borrow money.

Applications have become largely web-based.

Paper applications are not extinct, but they are on life support. You can certainly fill out a mortgage, credit card, auto, or personal loan application using pen and paper, just like our parents did when they were younger. But we also can fill out the same applications via web-based tools. This is meaningful because, unlike paper applications, the fields and the values in those fields that are included in such web-based applications are both fully legible and can be considered by credit scoring and other automated underwriting systems.   

Almost all lending decisions include the consideration of one or more credit scores.

If you have applied for a credit card since the late 1980s or any type of loan since roughly 2000, then it’s almost a certainty that your lender pulled one or more of your various credit scores. Compare this to applications that had been submitted prior to the late 1980s, a time when few applications for credit were underwritten using a credit bureau risk score. Certainly, in today’s credit environment it’s almost unheard that a lender or service provider would fail to procure and rely on some form of credit score when evaluating a consumer’s application for almost any form of credit or services.

Lending criteria are more centrally established, controlled and deployed.

If you’ve ever heard the term “hub and spoke,” it was likely referring to how airlines operate their flights through the various cities that serve as hubs, like Dallas, Atlanta, Salt Lake City, and others. The same phrase can also be used to describe what’s commonly referred to as centralized lending in the consumer credit environment. The risk management groups within large financial services companies with hundreds or thousands of local branches will establish lending policies. These policies will then be deployed throughout the lender’s network of branches. This practice was much less common when our parents were seeking credit because lending decisions were likely to be made on a more local basis back then; perhaps even by someone who worked in a local bank or credit union branch and may even have known your parents.

Instant credit is, well, instant.

There was a time when a lender could take weeks or months to make a final decision about an application for credit. Credit reports were printed, and teams of underwriters would physically read and interpret them. For large lenders that would receive thousands of applications daily the process was extremely time-consuming. This all changed when credit scoring became a common component of credit application processing. Credit scoring has allowed lenders to build streamlined lending policies around a three-digit number rather than 20-page credit reports full of disparate data. As a result, if someone applies for credit today, the lender will pull a credit report and a credit score and will be able to make an instant decision, at least a preliminary one.  

Validation results for VantageScore 4.0

Validation Study for VantageScore 4.0 Credit Scoring Model Shows Increased Predictive Performance and Alignment of Credit Scores

VantageScore 4.0 outperforms across all major lending industries in existing account management and new account originations;

Results Posted Publicly to Aid in Model Governance

VantageScore Solutions announces its inaugural validation study for the VantageScore 4.0 model, which showcases how the latest model outperforms pre-existing versions of VantageScore and credit reporting company (CRC) scoring models. With the inclusion of trended credit data and the application of machine learning techniques, the VantageScore 4.0 model shows predictive lift that can significantly improve a lender’s business.

Highlights of the 2018 validation study results include:

  • Overall, VantageScore 4.0 provides a predictive lift as compared with earlier VantageScore models and the CRC benchmark model for mainstream consumers in all credit categories.
  • Consistency – 93% of consumers receive credit scores from the three CRSs, which fall within a 40-point span (95% for the mortgage, 94.8% for bankcard).
  • Universe Expansion – 4.2% to 9.9% performance lift as compared with VantageScore 3.0 in the categories of account management and originations (respectively) among newly scored consumers.

As part of its commitment to transparency, VantageScore Solutions annually validates all VantageScore models and shares the results publicly. VantageScore Solutions considers this a best practice, which facilitates compliance of users of the model.

This is the first validation study of VantageScore 4.0 since its launch last year. A standard two-year timeframe was used for the analysis (2015-2017).

Trended Credit Data

The VantageScore 4.0 model incorporates first-to-market innovations such as the use of trended credit data, which captures the trajectory of borrower behaviors over time.

In the validation study, trended attributes’ contribution to the score more than doubles in predictiveness for low risk (Prime and Superprime) credit tiers compared with high risk (Subprime, Near-Prime, and Thin & Young) credit tiers. This provides a better separation in lower risk segments, a highly desired population for many lenders.

Machine Learning

VantageScore 4.0 is also the first and only tri-bureau credit scoring model to leverage machine learning techniques in their development of scorecards for those with dormant credit histories (i.e., those with scoreable trades but with no update to their credit file in past six months).

In the validation study, VantageScore 4.0 outperforms VantageScore 3.0 by nearly 10% for new account originations and 4.2% for existing account management trades.

“Our validation studies are a hallmark of what sets VantageScore apart from other credit scoring models. Every year, we rigorously test our credit scoring models and share the results because that’s how much confidence we have in our models,” said Barrett Burns, CEO, and president, VantageScore Solutions. “This year is no different. Through the latest innovations we developed for VantageScore 4.0, we unequivocally proved a more predictive and consistent model can be accomplished without lowering credit risk standards.”

Validation results for VantageScore models are always shared publicly online. This year’s study can be found at

Credit score tips for college students

By John Ulzheimer, expert

No one ever said that college was cheap. In fact, many of the largest expenses have nothing to do with tuition — and no, we’re not talking about pizza.

Everything is expensive, and the financial choices students make during these years will impact the rest of their lives. That’s why it pays to have a plan for the upcoming year and thereafter, both academically and financially.

Before you or your student heads off to college this semester, keep these tips from VantageScore Solutions in mind.

1. Be smart with loan applications.

Student loans are a college mainstay, but if they are handled improperly, that could hinder your financial future. In most cases, your applications for student loans will have only a limited impact on your credit score, but to be safe, learn all you can about any loan before applying for it. And once you do apply, consolidate your applications in the same two-week timeframe to minimize any negative impact. Consolidating your applications is important because the algorithms that calculate your credit score will view that additional activity favorably as an indication that you were shopping for the best rate and account.

2. Your textbook choices could make a difference.

Does buying or renting your textbooks really matter to your credit score? In short, it can. Failure to return a rented textbook or even returning it late can lead the lender to send the account to collections. If your credit report shows an account sent to collections, that item could have a negative impact on your credit score. To prevent this, either buy your books if you can or if you choose to rent, be sure to return the books on time. The ramifications of a late return could be much more severe than you would expect.

3. Build your credit history smartly.

If you’re 18 and over, every college transaction is a chance to build and enhance your credit history and you should treat them as such. Pay your bills on time, especially those with your name on them, such as utilities. Limit yourself to a single credit card, don’t miss payments, and avoid maxing it out. You should also try to pay off the entire balance each month to make sure your money goes to good use and you don’t waste it on interest payments.

4. Save money wherever you can.

Paying those bills off will be a lot easier to do if you have the money. Making sure that you have sufficient funds starts with you setting a budget and making smart financial decisions around campus. When you set a budget for yourself, make sure this budget is based on your net income (what you bring home after taxes) rather than your gross income (what you earn before taxes). This will give you a more accurate understanding of the money you have to spend. To support this budget, you can also serve as a resident adviser (RA) to earn extra money and/or free room and board. And if you’re not an RA, don’t be afraid to have a roommate and to buy used books or furniture. Finally, cut down on unnecessary dining experiences by eating at home when you can. It may not be as exciting, but you’ll be thankful for the extra money.

5. Realize the decisions you make will impact your future.

In most cases, the student loans you had taken out will start payments when you leave college. You needed those loans to pay your tuition bills, but they can now quickly damage your credit score if you miss a payment. Be mindful of your expenses — current and ongoing — and pay every bill in full and as quickly as you can. The sooner your loans are paid off, the sooner you can put that money toward the other things that the world after college has to offer.

Disclaimer: The views and opinions expressed in this article are those of the author, John Ulzheimer, and do not necessarily reflect the official policy or position of VantageScore Solutions, LLC.

5 Questions with EarnUp’s Top Executives

Today we are interviewing the top executives at EarnUp – CEO Matthew Cooper and President Nadim Homsany.

EarnUp is a financial technology application that helps Americans avoid missed payments and build financial health. EarnUp automatically sets a few dollars aside when the customer can afford it for future loan payments so that the payments are made on time and the customer is on track to get out of debt. This technology is a win-win for consumers and for consumer debt lenders, servicers, and investors. EarnUp is also fully transferable between lenders so consumers can enjoy uninterrupted benefits if their loan is sold or transferred to a new loan servicer.

1) AI has been a differentiating and driving force in data analytics these days. What type of AI technology do you use to automate payments for your customers so they can get out of debt faster while also being able to save?

Nadim - We are always advancing our artificial intelligence capabilities to help consumers. EarnUp uses AI to help find the best payment schedules for our customers. EarnUp automates a consumer’s payments so that they can get out of debt faster and easier.

30% of EarnUp users report fewer missed payments since they started using the application, based on a 2017 internal study. In addition, 80% of EarnUp’s users report that they were able to automate their loan payments for the first time, indicating the power of EarnUp as a revolutionary technology solution for a broad range of consumers.

We constantly try to remove obstacles to financial betterment for those who need it most. We want the customer journey to be easier so that they can further their education about money and harness more opportunities for personal financial growth. We are relentless about helping those in poverty too. EarnUp’s priority is advancing financial inclusion to help low-income Americans manage their debt. We will continue to develop partnerships with major nonprofit and for-profit companies and organizations to create win-win partnerships that help Americans get out of debt faster.

2) To clear up any misconceptions out there, is your platform geared toward loan consolidation or loan refinancing? Or is it neither?

Matthew - EarnUp does not believe in solving debt challenges with more debt! One of the things that differentiate our platform is that EarnUp does not consolidate or refinance any loans. We are purely a payment and budgeting solution that helps people efficiently manage their earnings to make their loan payments on time and build financial wellness. Consumer debt in the U.S is at a record high with roughly 200 million Americans burdened with debt from student loans, mortgages, credit cards and more. With more than 60% of Americans living paycheck-to-paycheck, low-income citizens struggle to pay off debt given the complexity of the existing loan payment system. Since its launch in 2015, EarnUp has helped Americans manage over $1 billion in consumer loans.

3) What resources does EarnUp have available for first-time homeowners?

Matthew - Information and access to qualified professionals are both major challenges to supporting affordable homeownership in America today. We are passionate about this area and work with a broad range of mission-driven platforms to help Americans achieve their goals. In partnership with Freddie Mac, EarnUp currently works with over 15 nonprofits nationally including GreenPath Financial Wellness, HomeFree-USA, and NHS of Chicago. These nonprofits collectively provide counseling services to over 300,000 Americans per year. The majority of these consumers are renters today and we help them move toward homeownership by getting on track for their current loan payments, paying down debts faster, and connecting consumers with the right education resources to make smart home buying decisions. We have recently been approached by a number of banks and mortgage originators about extending these services to their customers and we are evaluating expanding our partnerships in this critical area.

We also have a new partnership with Framework Homeownership to support consumers throughout their homebuyer journey. Together we have the shared goal of increasing the financial wellness of homeowners. Framework will offer a personalized combination of financial technology solutions to help the consumer throughout the homeownership journey. The partnership is supported by grant funding from EarnUp investor Acumen America, a nonprofit venture fund tackling problems of poverty in the United States.

We have some exciting stuff planned in this homebuyer space for 2019 so keep a lookout!

4) Tell us about the need for your partnerships with Acumen and GreenPath?

Nadim - Big challenges like this are never completed alone. We have amazing partners, investors, advisors, and team. The community and fintech industry supports what we are doing and we are so thankful for partners like GreenPath and Acumen, as well as Freddie Mac and Framework.

Earlier in the year, we announced the results of our partnership with GreenPath. Together we created a one-of-a-kind for profit/nonprofit fintech partnership designed to support the goal of bringing Americans out of debt. The report, Building Successful Nonprofit-Fintech Partnerships, offers a “how to” for other organizations that wish to launch similar efforts. You can read the report here:

5) Since your launch, do you find any trends in American consumer debt? Also, are you finding more consumers able to “put a few dollars aside” in this economy?

Matthew - This is a great question. The most critical insight we have gained in our 5+ years at EarnUp is that average Americans can make their payments and save if they are given the right financial tools. Technology has an amazing ability to help paycheck to paycheck consumers and we are passionate to expand access these tools to every American borrower. Earnup has proven we can reduce missed payments for consumers by a third and help over 90% start to put extra money aside. This is very exciting for consumers, lenders, and regulators who are trying to find ways to support affordable lending and sustainable homeownership in this country. There are no shortage of challenges in this market with mounting consumer debt, increased regulations, and macroeconomic uncertainty. We are proud to be working with many of the leading financial institutions and nonprofits to get ahead of these challenges and leverage technology to empower consumers.

About EarnUp
EarnUp is a Forbes Fintech 50 winner offering a consumer-first platform that intelligently automates loan payments and identifies earning opportunities for the 200 million indebted Americans. EarnUp puts a few dollars aside for loans when consumers can afford it—then makes timely payments to help consumers get out of debt faster. Based in San Francisco, EarnUp is backed by prominent venture capital firms Blumberg Capital, Kapor Capital, Correlation Ventures, Camp One Ventures, and Fenway Summer Ventures plus other leading angels and entrepreneurs. EarnUp is a winner of the prestigious Financial Solutions Lab sponsored by JPMorgan Chase & Co. and the Center for Financial Services Innovation. For more information, visit, email:, and follow on Twitter @EarnUp.

About Matthew Cooper
Matthew is EarnUp’s Co-Founder & CEO. He is the son of a minister and a teacher and has lifelong passion supporting marginalized communities through volunteer work and advocacy. Prior to EarnUp, Matthew worked at Clearlake Capital, a $3B private equity firm focused on software and financial services industries. Prior to Clearlake, Matthew worked with NCB Capital, a $12B asset manager, leading private equity investments in the emerging markets. Before that, Matthew was at McKinsey & Company counseling Fortune 500 clients in the financial services and retail industries. He graduated magna cum laude from Princeton University. You can learn more about Matthew and follow on LinkedIn and Twitter @MatthewWins.

About Nadim Homsany
Nadim is the son of immigrants who arrived in the US with virtually nothing. His upbringing instilled in him a passion for helping people build financial resilience and independence. Prior to EarnUp, Nadim worked at Serent Capital, a $600M private equity firm, focused on tech-enabled services. Prior to Serent, Nadim led investments with NCB Capital, a $12B asset manager. Before this, Nadim worked at McKinsey & Company, consulting large banks. Nadim also practiced IP and technology law at Kirkland & Ellis. Nadim holds a JD degree from Harvard Law School and graduated highest honors from Rutgers University. You can learn more about Nadim and follow on LinkedIn and Twitter @nhomsany.

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