VANTAGESCORE SOLUTIONS INTRODUCES VANTAGESCORE 3.0 MODEL

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1 FOR IMMEDIATE RELEASE Contact: Jeff Richardson VantageScore Solutions VANTAGESCORE SOLUTIONS INTRODUCES VANTAGESCORE 3.0 MODEL New Model Sets the Standard for Predictiveness, Inclusiveness, and Consumer Friendliness; New Familiar Scoring Range Introduced ( ) STAMFORD, Conn, March 11, 2013 VantageScore Solutions, the company behind the VantageScore credit scoring model, announced today the unveiling of its newly constructed credit scoring model, VantageScore 3.0. The new model provides up to 25 percent predictive improvement over earlier models and has the ability to formulate a score for million previously unscoreable consumers a group larger than the population of Texas. The scale used in the new model is , a change from earlier VantageScore models. Extensive testing of the VantageScore 3.0 model shows that its predictive strength well exceeds other credit scoring models across industries and applications, but in particular within the key prime and nearprime consumer populations. The new scale of will help facilitate easier model implementation for lenders, and more familiarity for consumers. The VantageScore 3.0 model is both a new model, and new path forward for VantageScore Solutions and the credit scoring industry. The model was built with a lender s implementation and risk management needs in mind, in conjunction with a deeper understanding for what information consumers need to become better managers of their own credit, said Barrett Burns, president & CEO of VantageScore Solutions. Today s competitive lending environment dictates that lenders need access to as many creditworthy consumers as possible within their target universe, demanding the highest level of predictive performance from the credit scoring models they use. The VantageScore 3.0 model facilitates this, and provides risk managers a level of predictiveness that will allow them to confidently extend credit to tens of millions of consumers that were previously invisible to them so that those consumers have a greater chance to access mainstream credit, which is one of our principle goals. 1

2 As another measure to aid both lender implementation and consumer understanding, VantageScore Solutions reduced the number of reason codes to less than 80, simplified the reason code statements within the VantageScore 3.0 model and wrote them in plain English to aid consumer understanding. HOW THE VANTAGESCORE 3.0 MODEL SCORES MILLIONS MORE CREDITWORTHY ADULTS The VantageScore 3.0 model reaches a new milestone by providing a predictive credit score to million more adults than traditional scoring models. The model accomplishes this by: 1) Developing a thirteenth scorecard to generate a predictive credit score for those with little-tono recent credit activity. 2) Factoring non-tradeline credit data such as collections, public records, and inquiries when active tradeline data is not present. 3) Utilizing tradeline data in consumer credit files that is older than 24 months but remains predictive, an analytic breakthrough and major benefit to infrequent credit users. 4) Using rent, utility and telecom data when it is present in a consumer s credit file. HOW VANTAGESCORE 3.0 ACHEIVES TRANSFORMATIVE PREDICTIVE LIFT The VantageScore 3.0 model improves upon an already strong VantageScore platform used in earlier models. In performance tests against the VantageScore 2.0 model and benchmark models provided by the three national CRCs, the VantageScore 3.0 model demonstrated significant gains in predictiveness. Importantly, the model achieves up to 25 percent predictive improvement among prime and near-prime consumers, which is traditionally where lenders focus lending strategies and is the most sought after group among most mainstream lenders. Similar double digit results are achieved within the same population for originations in the real estate, auto, and bankcard segments. Other performance achievements seen with the VantageScore 3.0 model include: 1. Eighty percent of consumer scores are within 20 points across the three national credit reporting companies (CRCs) 2. Nearly identical risk alignment across all three CRCs 3. Maximum predictive performance for both originations and account management scenarios The key driver of the VantageScore 3.0 model s improved performance is using more granular data from all three CRCs. The granularity of the data allowed model designers to select 150 of the most predictive characteristics from an estimated 900 behavioral characteristics that were tested. 2

3 Among the predictive attributes of this data are: Detailed mortgage tradelines separating first mortgage from other mortgage related transactions, facilitating greater intelligence with regard to a borrower s mortgage-related debt. More distinct definitions of data, such as the ability to identify student loan accounts from other types of installment accounts. More specific measurement of delinquency and default timeframes, which provides for an improved representation of a consumer s payment behaviors. INTRODUCING REASONCODE.ORG As part of a re-launch of its own website, VantageScore Solutions has added a microsite aimed at further explaining reason codes overall to consumers as well as providing details about what each reason code means in plain English. Features of ReasonCode.org include: A primer on what reason codes are and how they are used Searchable and interactive reason code definitions and explanations A glossary of common reason code terms Reason codes are 2-character numeric codes accompanied by a short statement explaining to a consumer why their credit score wasn t higher. Consumers are given the reason codes and statements in various credit score disclosure notices and adverse action letters sent by lenders, among other times when a credit score is provided to a consumer. The simplified reason code explanations were written specifically with a focus on consumer understanding. OTHER KEY FEATURES AND TRENDSETTING CHANGES RELATED TO THE LAUNCH OF THE VANTAGESCORE 3.0 MODEL The launch of the VantageScore 3.0 model represents a major analytic breakthrough for the credit scoring market as well as a major shift from business as usual among credit score developers. Other unique aspects of the VantageScore 3.0 model include the following: 1) Easier to implement A score range makes implementation of the VantageScore 3.0 model easier for lenders. Additionally, as with all VantageScore models, the VantageScore 3.0 model is deployed across all three national CRCs, reducing score variance and producing nearly identical risk alignment, leading to added confidence in lending decisions. 2) Built using 45 million anonymous credit files 3

4 The VantageScore 3.0 model was built using a much larger database of anonymous consumer credit files. Each CRC contributed a database consisting of 15 million anonymous credit files containing more granular data. By building the VantageScore 3.0 model on such a large database, the model delivers a higher level of predictiveness by capturing a larger sample of consumer behaviors and product types. 3) Data sample from blended timeframes The data sample used to build the VantageScore 3.0 model was developed on consumer behavior from two different two-year timeframes: and Each performance timeframe contributed 50 percent of the model s development. Developing the VantageScore 3.0 model over the extended window reduces the model s sensitivity to consumer behavioral shifts over different volatile periods. 4) Special treatment for victims of a natural disaster. Lenders have long had the ability to indicate accounts belonging to natural disaster victims when reporting account activity to the CRCs. When accounts are reported with the natural disaster reporting code, the account is not counted in the calculation of a credit score. This has meant that both positive and negative information is potentially invisible to a consumer s credit score. With the VantageScore 3.0 model, only information that would negatively impact a consumer s credit score is set to neutral so that consumers can continue to benefit from information that would have a positive impact in the event they are victims of a natural disaster. Also with the launch of the VantageScore 3.0 model, VantageScore Solutions unveiled a new logo, website and branding initiative, which can be viewed About VantageScore Solutions VantageScore Solutions, LLC ( is an independently managed company that holds the intellectual property rights to VantageScore, a generic scoring model introduced in March Initially developed by America s three national credit reporting companies (CRCs) Equifax, Experian and TransUnion VantageScore Solutions highly predictive model uses an innovative, patented and patent-pending scoring methodology to provide lenders and consumers with more consistent credit scores across all three major credit reporting companies and the ability to score more people. ### 4

5 FACT SHEET FOR VANTAGESCORE 3.0 MODEL Key Benefits Dramatically increases the number of consumers that can be scored; scores between million more than traditional credit scoring models. Significant performance lift, up to 25% improvement over VantageScore 2.0 for prime and nearprime consumers, resulting in a highly predictive credit score model for loan origination processes as well as ongoing account management. Developed in order to more easily facilitate lender implementation. Reduced the number of reason codes to fewer than 80, and re-wrote reason code statements in plain English to facilitate greater consumer understanding. Generates more consistent scores allowing lenders to have confidence in default probabilities regardless of which credit reporting company pulls the score. Consumer-friendly model design elements such as special treatment for victims of natural disasters. Captures both a broad and recent set of consumer behaviors by using two blended two-year timeframes for development that represents consumer credit behaviors during the economic crisis as well as current credit and payment trends, reducing the model s sensitivity to highly volatile behavior that can be found in a single timeframe.

6 Key Features Built with an additional thirteenth scorecard for those without credit history in the previous 24 months supported by characteristics that produce a predictive credit score. Able to interpret more granular characteristics within tradelines, resulting in the ability to better identify loan products, transaction and loan amounts, timeframes, and other characteristics driving the predictive performance improvement. Built with scale range of , which is more familiar to consumers and often embedded in lenders systems and applications. Development sample consisted of 45 million anonymous consumer credit files from two blended timeframes of and New consumer tools describing what goes into their VantageScore credit score and a new website to explain reason codes: ReasonCode.org.

7 WHAT INFLUENCES YOUR VantageScore Credit Score? Information in your credit files at the three national credit reporting companies is used to calculate your VantageScore credit score. This information can be grouped into six categories, but not every category carries the same weight in your score. Read below to understand each category, its weight in your score compared to the other categories and tips you can use to manage your credit wisely. EXTREMELY HIGHLY HIGHLY PAYMENT HISTORY Repayment behavior (current, late or charged-off) Pay all bills ON TIME. AGE and TYPE of CREDIT Length of credit history and types of credit MAINTAIN a mix of accounts (credit cards, auto, mortgage) over time to improve your score. % of CREDIT LIMIT USED Proportion of credit amount used/owed on accounts Keep revolving balances low, UNDER 30% of credit limits. TOTAL BALANCES/DEBT 90% of prime consumers pay all their debts on time. Prime consumers have an average of 13 loans. Typically the oldest loan is more than 15 years old. Prime consumers typically use 28-30% of the maximum amount of credit a lender extends to them. Total amount of recently reported balances (current and delinquent) An Explanation of PRIME While every lender makes its own credit decisions, a prime VantageScore credit score would range from What ISN T Included in Your VantageScore Credit Score? There are many misconceptions about credit scores. One of the most important to understand is what information the VantageScore model, or any credit scoring model for that matter, do NOT use. The VantageScore model does not consider: Race Color MODERATELY REDUCE the amount of DEBT you owe. Prime consumers typically carry $100,000 to $105,000 in total debt. Religion Nationality Sex RECENT CREDIT BEHAVIOR Number of recently opened credit accounts and credit inquiries Marital Status Age LESS DON T open too many new accounts too quickly. Prime consumers don t open accounts too often. On average, their newest account is more than 3 years old. Salary Occupation Title AVAILABLE CREDIT Amount of credit available Employer Employment History LEAST Only open the amount of credit you NEED. Prime consumers keep an average of $20,000 to $22,000 of credit that they do not use. Where You Live Recovering from an Action that Caused Your Score to Drop IMPACT TO CREDIT SCORE -90% -70% -50% -30% -10% Bankruptcy Missed Payment/Default Maxing Out Credit Card Closing an Account Obtaining New Credit Max Impact +1 Month +3 Month +6 Months +1 Year +2 Years 7-10 Years SCORE RECOVERY TIME This chart demonstrates the amount a score can drop from negative credit events and the amount of time needed to recover the lost points. The impact that negative information will have on your credit score may diminish over time because your credit history is weighted less as it ages. The precise impact and recovery period that specific credit-related activities have on consumers credit scores are likely to vary because everyone s credit file is different and unique. For more info, visit VantageScore Solutions, LLC All Rights Reserved.