Investors in Asset-Backed and Mortgage-Backed Securities Confirm Demand for Greater Competition, Inclusion and Transparency from Credit Scoring Models

FTI Consulting Report, Representing $47 trillion in Assets Under Management, Uncovers Insights Around Credit Scores, ESG

STAMFORD, Conn., June 2, 2022 /PRNewswire/ -- A study commissioned by VantageScore Solutions^®, LLC and conducted by FTI Consulting, Inc. found that institutional investors with exposure to asset -backed securities (ABS) and residential mortgage - backed securities (RMBS) are supportive of competitive credit scoring methodologies and desire more transparency and inclusivity among credit scoring models used to underwrite the loans that collateralize the securities they purchase.

Specifically, the survey which included qualitative and quantitative research representing the views of a sum aggregate of $47 trillion in assets under management (AUM), revealed that:

• Investors Want Alternative Scoring Models - 93% of investors are open to considering alternatives to conventional scoring methodologies – with a similar level of support from those who focus on ABS and RMBS specifically (91%);
• Investors Demand Financially Inclusive Credit Scoring - 85% of investors noted the importance of the development of models that are more inclusive and incorporate methodologies that will enable the inclusion of the majority of the underserved communities across the United States;
• More Transparency is Key- 58% agree greater transparency around how credit scores are calculated would be helpful;
• ESG Is Critical- Investors believe Environmental Social Governance (ESG) already plays an important role in investor decisioning with 76% expecting this phenomenon to continue in the future.

"This research shows that investors want credit scores to keep pace with demographic shifts and advances in technology and data innovation – without lowering risk standards," said Silvio Tavares, President & CEO of VantageScore. "There is clearly demand to move away from the status quo with an emphasis on increased inclusivity and transparency, which are two areas where VantageScore is best in class."

To download the full report, "The Future of Credit Scoring: ESG, Innovation and the ABS Investor", visit https://vantagescore.com/capital-markets/fti-consulting-research/.

VantageScore Solutions develops consumer credit scoring models that combine the need for both financial inclusivity and dependable predictiveness across all scoring ranges. The company's most recent models score approximately 96 percent of all adults 18 and older – including 37 million more people than conventional models – without sacrificing safety and soundness. As a result, lenders using VantageScore can extend credit to those who have been historically marginalized, including minority and lower-to-middle income Americans. VantageScore credit scores are used by thousands of lenders, landlords, utility companies, telecom companies, and many others to determine creditworthiness. Additionally, tens of millions of consumers rely on free access to their VantageScore credit scores to monitor their own creditworthiness.

VantageScore Solutions was launched in 2006 and is owned by America's three national credit reporting companies (CRCs) – Equifax, Experian, and TransUnion. Using a patent-protected tri-bureau methodology, VantageScore delivers time-tested, innovative and more consistent credit scoring models across all three CRCs.

SOURCE VantageScore

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