At TransUnion, we believe that consumer access to multiple credit scores is key to expanding economic inclusivity. Earlier this year, we looked at how the use of additional credit scoring models in the mortgage market could address unequal lending access among disparate economic and ethnic groups. We also examined the explosion of consumer engagement with a variety of credit scores via direct financial institution relationships, freemium sites and the credit reporting agencies (CRAs), ushering in a new era of consumer credit-savvy and empowerment.
These developments are generating exciting innovations in credit scoring, with the potential to help more individuals and families gain access to capital and improve their standards of living. One of the more promising movements is the incorporation of trended data into credit scores. Trended data, also known as historical or time-series data, illustrates more than a view of consumer debt at a single point in time. By using trended credit data, lenders can incorporate up to 30 months of account history on loans and credit accounts, exposing patterns that can help them make better-informed decisions.
For example, the VantageScore 4.0 credit score leverages historical credit data like changes in balances and actual payment amounts. This information allows lenders to see, for example, whether a consumer is paying off credit cards each month or carrying a balance — and whether that monthly balance is trending downward or upward. VantageScore 4.0 credit score also offers solutions to three specific challenges that traditional models present to lenders and consumers alike:
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