STAMFORD, Conn.—VantageScore Solutions is set to roll out a new credit scoring model that the company claims more accurately measures credit risk.
The new model—expected to appear this year— uses more historical data and machine-learning techniques while culling less reliable information, Yahoo Finance reported.
The release will be VantageScore Solutions fourth version of its credit scoring model, to be used by the three national credit bureaus.
“VantageScore 4.0 improves on its predecessor in three main ways. First, it looks at a consumer's credit behavior over time, incorporating more of what's known as ‘trended data.’ For example, the score takes into account how a consumer's credit balance has changed over a period of months, rather than taking a single snapshot in time. The new model also excludes a lot of public record information, especially liens and judgments. With this new model, medical collections won't be reported on credit files until after six months have passed. That's because there is often confusion as to whether the consumer or insurer is responsible for the payment.” Yahoo Finance stated.
The third big update is the use of machine-learning techniques to help score consumers with thin credit files. VantageScore used large data-processing platforms to examine thousands and thousands of combinations of consumer behaviors to identify which ones were associated with people paying their bills on time, noted Yahoo Finance.