Thoughts on Leadership

Earlier this month I, along with other members of the VantageScore team and extended family, had the privilege of attending American Banker’s Most Powerful Women in Banking Awards Dinner.

I want to extend my congratulations to all of the women honored. We are extremely proud to once again sponsor the event, which we have done for six of the 17 years of its existence.

The incredible women honored have achieved success through their intelligence, their skills and experience, their ambition and their pursuit of excellence.

Unfortunately, that often hasn’t been enough and the playing field is not always even.

That’s why this year American Banker also recognized those who have served as allies: the people—both women and men—who have supported them along the way.

A good articulation of this was provided by American Banker in an article about the awards dinner:

Keynote speakers at Thursday night’s gala called out mentors who had helped them along their path and urged others in the audience to be allies to the next generation of women.

“We’re all here tonight because at some point a man or a woman played a critical role in giving advice or giving us an opportunity or coaching us in a time of need or just encouraging us,” said Barbara Desoer, the former chief executive officer of Citibank, N.A. who accepted an award for lifetime achievement. “It’s incumbent upon all of us to continue that.”

Cathy Bessant, who was recognized as the Most Powerful Woman in Banking, mentioned Desoer by name in her own remarks. Sometimes being a good mentor means giving someone tough advice, Bessant said.

“Barbara had the courage and the grace to tell me things I did not want to hear,” Bessant said.

To all those who served as allies, especially those within the VantageScore orbit, thank you and keep up the important work.

Moreover, to the women on the VantageScore team, thank you for the leadership, innovation, dedication and important contributions.

Speaking of team work and major contributions, our data analytics and marketing team here at VantageScore  have worked side-by-side with the Wall Street Journal to develop an interactive game called the “Credit-Score Game”, which allows users to test their knowledge of how everyday consumer credit behavior can impact a credit score and by how much.

We are proud of this collaborative effort, not only because it raises our brand’s awareness amongst readers of the WSJ, but it also reinforces VantageScore’s credibility in the industry. We hope you take a moment to play the game and see if you really know your stuff!


Barrett Burns

Is chasing 850 a waste of time?

It’s no secret that having a strong credit score is one way to earn great deals from creditors. A high credit score means low credit risk, and lenders love those types of applicants. There’s also no shortage of online content that purports to teach consumers how they can improve their credit scores, to include obtaining the almost mythical perfect score of 850.

We’ve been told that an 850 credit score means unimpeded approvals, the lowest interest rates possible, and the highest credit limits, but is that really true? Do you really need an 850 in order to earn great deals from creditors?

No, Not Really

The answer is unequivocally no. You do not need an 850, or anything close to 850, in order to earn the best deals that a lender has to offer. While the perfect score of 850 is very impressive, it’s also unnecessary.

At some point along the credit score range of 300 to 850, there comes a point whereby you are seen as practically void of credit risk to a potential lender. That point isn’t at 850, but at a much lower credit score threshold. It’s that score threshold where you should be aiming to stay above.

What Does a Credit Score Actually Mean?

Every score that is calculated when you apply for credit tells a story about you. That story is expressed in what’s called your odds-to-score relationship, which indicates the likelihood that something will occur. That “something” is the probability you’ll go severely delinquent in the next 24 months.

A very poor score means your odds of going delinquent are unacceptable, which is why consumers who have poor scores are either denied or saddled with much higher interest rates. A very strong score indicates your odds of going delinquent are low, which is why consumers with strong scores are usually approved and given competitive rates and terms. This practice is formally referred to as risk-based lending.

You certainly do not need an 850 in order for lenders to feel comfortable that you’re going to pay your bills on time. This is why someone with an 850 doesn’t get better credit offers than someone with, say, credit scores in the high 700 range.

780 or Above Should Be Your Target

If you were to exclude student loan lenders, which almost always require a co-signer, the majority of credit issued in the United States is for automobiles, mortgages, credit cards, and business loans. Assuming you meet the lender’s various capacity and collateral requirements, a credit score of 780 or above is going to practically guarantee you the best deal any of those lenders have to offer. For those of you doing the math, that’s some 70 points from a perfect score.

In fact, there are some lenders that will offer you their best deals at 760 or even 720. However, while those scores may earn you a great deal, it’s not as universal as what you’re likely to experience at or above 780, which is why that should be your target score.

How Can I Get and Stay There?

This is the easy part. Anyone can earn and maintain scores at 780 or above. It’s not rocket science as some may have you believe. As long as you can do three things repetitively then you’ll hit or exceed 780.

First, you have to avoid negative information from hitting your credit reports. This means late payments, record of default, collections, and anything else that indicates mismanagement of credit obligations. If you can do this then you’ll bank about 40% of the possible credit score points and you’ll be well on your way.

Second, you have to manage your credit cards properly. This doesn’t mean you should avoid credit cards or even pay your balances in full each month, although that would save you money in interest fees. What this does mean is you have to maintain credit card balances that are no higher than 30% of your credit limits, and lower if possible. And if you can limit balances to fewer credit cards, that would help as well. Collectively these are worth approximately 35% of the points in your score.

Finally, apply for credit sparingly. This means avoiding loading up your credit reports with hard inquiries and newly opened retail store cards during the holiday season just to save a few dollars on your shopping. The result of doing so is avoiding the impact of hard inquiries and the reduced average age of your accounts caused by continuously adding newly opened accounts to your credit reports. This is worth another approximately 25% of credit score points.

That’s it. That’s 100% of the points that are up for grabs. If you can simply pay your bills on time, maintain low balances on your credit cards, and not apply for credit excessively you’ll easily eclipse 780. Then you’ll be the one writing the articles about how to earn and maintain great credit scores.

Trended data update:
New white paper

New research from VantageScore Solutions underscores how even a limited sample of core credit behavior information can drive better decisioning for lenders and opportunities for consumers.

VantageScore Solutions, LLC, developer of the VantageScore credit score model, released a new white paper that substantiates the need for more modern credit score modeling techniques to score today’s consumer. “Improved Assessment of Credit Health Using Trended Credit Data” showcases, through empirical analysis, how leveraging trended data provides better risk separation, and a more fair opportunity for consumers.

Traditionally, most credit scoring models use a “static” credit view (i.e., the most recent credit report) to analyze a consumer’s creditworthiness, which only offers a one-point-in-time snapshot of a consumer’s use of credit.

New research from VantageScore demonstrates that trended credit data provides a more complete risk assessment, enabling decisions to rely more on actual credit management behaviors of consumers and less on the length and depth of credit use history. These decisions ultimately result in lower default rates.

VantageScore data scientists found that 32% of consumers, roughly 1 in 3, see a credit tier change when trended credit data is factored into their credit score, with most of the shifts occurring in the Prime and Super-Prime tiers. Additionally, consumers who were “swapped up” into a higher credit tier exhibited 20-40% lower default rates compared to those consumers who were “swapped down” from that same credit tier into a lower level. These findings held across all loan types (e.g., auto, credit card, mortgage, installment) as well as for originations and account management functions.

Consumers who shifted downwards might have had longer tenures using credit and less delinquencies historically – both of which are static attributes weighted heavily by many conventional credit scoring models – but they also possessed significantly higher credit card balances and rising utilization rates over time. By contrast, those consumers whose scores increased demonstrated positive behaviors such as more aggressive payments on installment loans and lower and more stable utilization rates over the past 12 months.

VantageScore 4.0 is the only tri-bureau generic scoring model to use trended credit data by evaluating a consumer’s credit behavior over a longer period of time; ultimately, providing a more comprehensive look at a consumer’s overall credit health.

“What this study shows is that consumer behaviors are outpacing many of the models in use today,” said Barrett Burns, CEO and president, VantageScore Solutions. “Not only does trended credit data provide a great opportunity for lenders to better identify riskier consumers, but consumers benefit because they can recover from a missed payment or two and build credit more easily. Fundamentally, a consumer has no power over the age of her or his credit and we are now able to recognize that and provide a better approach.”

For more details and to access the white paper “Improved Assessment of Credit Health Using Trended Credit Data”, visit:

WSJ’s “Credit-Score Game” powered by VantageScore

VantageScore is pleased to announce that it has worked closely with the Wall Street Journal on an insightful article and an interactive online game for its readers called the “Credit-Score Game”, a gamification exercise that shows how consumer credit behavior can influence a credit score and by how much (NOTE: there is a paywall).

For the game, VantageScore data scientists developed consumer profiles and simulated how common credit activities such as increasing credit card utilization or missing a payment might impact certain consumer profiles. The digital team at Wall Street Journal team developed an interface that allows users to select a profile and credit activity and then guess the score impact.

The “Credit-Score Game” is an example of going beyond an article and providing a more resonating and interactive educational experience.

Take a moment to play by clicking on the image below or click here to be directed to the WSJ article. 

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