PR - Experian Touts Detailed Segmentation of Consumers in Subprime Sector

Experian, a global information services provider, today announced that VantageScore the company’s most recently developed credit scoring model, provides lenders with a granular view of the subprime consumer segment. While many credit scoring methodologies have historically grouped all subprime consumers into one general category, VantageScore provides a more refined segmentation of consumers in lower score intervals, allowing lenders to identify pockets of relatively low-risk consumers within the subprime category.

A recent Experian study examined a sample of more than 40 million subprime consumers with mortgage tradelines, comparing their credit profile under a traditional Experian risk score and VantageScore. The study found that one-fifth, or approximately 20 percent, of those consumers originally classified as subprime using Experian’s traditional credit risk score were re-classified into lower-risk categories using VantageScore. 

“VantageScore’s innovative scoring technology helps lenders more accurately assess risk, specifically in the subprime consumer segment,” says Kerry Williams, group president, Credit Services & Decision Analytics at Experian. “By providing a more holistic view and a finer definition of the data in the credit profile, VantageScore allows credit grantors to make more precise and predictive lending decisions.” 

Using VantageScore, lenders are given the opportunity to refine their risk-management strategies, possibly extending lower rates or more competitive options to consumers who fall into the “lower risk” segment of the subprime sector.

VantageScore, a credit score jointly developed by Experian, Equifax and TransUnion, simplifies the credit granting process for businesses by providing a service that applies one, consistent formula to data from the three major credit bureaus. Introduced to the market in March 2006, this innovative approach to credit scoring provides an objective system across all three national credit reporting companies.