To the editor,
In August, VantageScore announced that our most recently introduced credit scoring models will no longer include any medical collection account information in order to prepare for future changes for how that data will be reported by the three national credit reporting companies. A recently published opinion article in American Banker ("
1) In 2023, 75% of all medical collections will be removed from consumers' credit files. The proactive removal from our models is prudent model governance. This removal of medical collections will impact all credit scoring models that use credit files and medical collections.
2) All changes to our models are taken with great care and diligence. As we disclosed in various public documents and forums, we determined from extensive analysis that the model would continue to rank order risk effectively despite removing the last remaining medical collection account information.
Model governance and predictive performance are critical in supporting a stable lending system and we support any comparative model research in this area. Nevertheless, a broader conversation focused on financial inclusion and housing equality is necessary. Our decision reflects VantageScore's continued effort to offer the most predictive scoring models AND to help increase financial inclusion.
According to the Urban Institute, approximately 4.8% of purchase mortgages acquired by Fannie Mae and Freddie Mac in 2020 were made to African American borrowers while White families accounted for over 75%. Similar inequitable trends are seen with Asian American and Latino borrowers. The financial industry can do better than this.
The technology exists today to change this antiquated system, however, mortgage market participants have been slow to address this because of opaque vested interests aligned with an incumbent provider.
We are more than happy to engage in a discussion about which credit scoring models should be used for mortgage applications and how, but these conversations must be fact-based and fully informed.
Regards,
Dr. Rikard Bandebo,
Executive Vice President and Chief Product Officer
VantageScore
