VantageScore Default Risk Index Quarterly Update: Moderation Continues in Lenders' Appetite for Risk

Issuers of Mortgages, Auto Loans, and Student Loans Assumed Less Risk in Q3 2016; Card-Lender Risk Profile Rose Slightly

STAMFORD, CT--(Marketwired - February 23, 2017) - VantageScore Solutions, LLC, developer of the VantageScore® credit scoring model, today announced the first quarterly update to its Default Risk Index (DRI) data series. The VantageScore DRI tracks the amount of default risk assumed by lenders in four U.S. consumer-loan categories: mortgage, bankcard, auto loans, and student loans.

The update, which encompasses lender activity for the third quarter of 2016, is located in interactive infographics at, and in a spreadsheet containing the full data series, which is available for download at the site.

Changes to specific index values are summarized in the following table:

VantageScore Default Risk Index: Update Summary, Q3 2016
Category Total Originations  Probability of Default (Weighted Avg.)  Default Risk Index  DRI vs. Last Quarter  DRI vs. Same Quarter Last Year
Mortgage $505.2 B  0.96%  82.5  -3.4%  -4.8%
Bankcard $97.0 B  2.82%  100.5  2.0%  2.8%
Auto $163.4 B  4.01%  91.1  -5.4%  -5.2%
Student $48.4 B  15.24%  73.7  -21.7%  -2.9%

Source: VantageScore Solutions, LLC and TransUnion

The foregoing update reflects several key points:

  • Moderation in risk taking that began in 2014 largely continued into the third quarter of 2016. After an expansion in risk-taking into early 2015, 2016 saw continued contraction into the third quarter. On average, only credit card lenders maintained a risk profile comparable to those of late 2013, at the start of the DRI data series.
  • Mortgage, auto, and student lenders took marginally less risk in the third quarter of 2016. Card lenders, however, moved in the opposite direction, with a small sequential increase in their risk profile.
  • Origination volumes increased in all four sectors, with the strongest growth driven by the seasonal uptick in student lending.

About the Default Risk Index

The VantageScore Default Risk Index (DRI) and its website,, permit users to monitor the shifting quarterly risk profiles of loan originations in the mortgage, credit card, auto, and student loan categories. The DRI is derived using credit file data from TransUnion and VantageScore odds charts -- tables furnished to VantageScore users that match values on the 300-850 VantageScore scale range with their corresponding probability of default (PD) values.

The Default Risk Index is a measure of relative changes in risk level, benchmarked against the third quarter of 2013, the first period for which data were compiled. Interactive tools at allow users to view trends for each loan category and freely download the data behind the charts.

The VantageScore Default Risk Index is provided as a free resource to institutional and individual investors, professionals in the securitization field, academics, and all others interested in systemic lending risk. It will be updated quarterly, with data reflecting loans issued in the preceding quarter.

VantageScore Solutions and TransUnion developed the DRI to highlight limitations in the traditional ways credit scores are used to evaluate risk for categories or pools of loans. Today's common practices -- using "weighted average" or "distribution by score band" to summarize risk -- are mathematically flawed. Reliance on those metrics can result in a miscalculation regarding the true credit quality of a loan pool as well as obscuring meaningful trends and leading a well-intentioned analyst to the wrong conclusions.

About VantageScore Solutions

Credit scores can impact many aspects of your life, everything from whether you are able to get a loan and how much interest you will have to pay to whether you are able to rent an apartment.

VantageScore Solutions, LLC ( is the independently managed company that owns the intellectual property rights to the VantageScore credit scoring models, including the VantageScore 3.0 model, which scores 30-35 million consumers typically not scored by conventional models without relaxing standards. VantageScore credit scores are used by lenders, landlords, utility companies, telecom companies and many others to evaluate consumer creditworthiness. Use of the VantageScore model gives these enterprises access to many more consumers and, in turn, provides consumers greater access to mainstream credit.

While there are many credit scoring models in the industry, the "win-win" for VantageScore is its innovative, highly predictive, patent-protected, tri-bureau scoring methodology that provides lenders and consumers with more consistent credit scores across all three national credit reporting companies. VantageScore is also the model tens of millions of consumers use to monitor their credit behaviors through dozens of websites and lenders who provide their users and customers with their credit scores for free. More than eight billion VantageScore credit scores were used in the 12-month period from July 2015-June 2016 by over 2,400 lenders and other industry participants, including 20 of the top 25 financial institutions -- an increase of nearly 40% over the previous 12-month period.

The company is celebrating its 11th anniversary in 2017.

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Jeff Richardson
VantageScore Solutions
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