– Laying off the old-fashioned credit scoring systems, lenders are showing a trendy inclination towards the hipster models like FICO Score 10T and VantageScore 4.0.
– There doesn’t seem to be any law enforcement forcing lenders to use these groovy models as of yet, but they’re choosing techie over traditional anyway.
– The aim here is to increase the pool of borrowers, however, the process is like a festival where everybody is invited, but the guests are filtered out at the entrance.
– The 10T in FICO Score 10T comes from the word ‘trended’, meaning that it essentially evaluates borrowers based on the trend of their credit behavior over the past 24 months rather than an italicized snapshot.
– VantageScore 4.0, on the other hand, has its own shiny feature. It uses machine learning models to predict a borrower’s ability to pay based on patterns identified in a vast sea of consumer data.
– Both these credit scoring systems claim to overflow lenders with potential borrowers who are turned down by the more traditional models.
New, Groovy Lenders Plan to Party with FICO Score 10T and VantageScore 4.0
Old Scoring Systems are so Yesterday
Lenders today are hopping on the techno bandwagon and embracing modern scoring models such as the FICO Score 10T and VantageScore 4.0. They’re ditching MS-DOS-like scoring systems and catching the next train to cool-town, with the primary goal to expand their borrowers’ pool. Unlike Steve Buscemi trying to fit in a high school, this seems to be working for them.
The Red Carpet of Borrowers
These new scoring models are like the exclusive parties where everyone’s invited, but not everyone gets past the bouncer. That’s where the unique selling points of FICO Score 10T and VantageScore 4.0 come into play.
The Trendsetter
The ’10T’ in FICO Score 10T isn’t just for show—it stands for ‘trended’. This system doesn’t just snap a Polaroid of your credit behavior but casts a slow, calculated scan over the past two years. It’s like taking a fine French wine, giving it a sniff, a swirl, and a sip before deciding if it’s worthy.
The Pattern Detector
VantageScore 4.0, on the other hand, is a tech wizkid, utilizing machine learning models to predict your ability to pay based on patterns detected in the abyss of your consumer data. It’s as if Sherlock Holmes had a tech-laden office in Silicon Valley.
Can we Trust these New-fangled Systems?
Just like the hipster’s irresistible urge to discuss the value of indie movies and organic coffee, both these systems claim to have the power to hook lenders up with potential borrowers who’d otherwise be stuck at the door with more old-school methods.
To sum things up, there’s a party going on in the lending industry, and the attendees are the trendy FICO Score 10T and VantageScore 4.0. While these models might seem as fresh and inviting as a brand-new Moleskine notebook at an artisan coffee shop, the real question is whether they’ll stand the test of time. Or will they fall victim to the notorious fickleness of trends? Only time will tell, and until then, the lenders are enjoying the increased borrower pool we hope they’re prepared when the party gets a little out of hand.
Original article: https://www.inman.com/2024/02/14/new-credit-scores-from-fico-vantagescore-gaining-traction/
