STAMFORD, Conn.--(BUSINESS WIRE)--VantageScore Solutions, LLC, the company behind the VantageScore® credit scoring model, announced today the results of a study detailing that the exclusion of Sold-Derogatory trade lines (i.e., severely delayed debts that are sold-off to debt collection agencies) will have minimal impact on consumer scores and will not impact the predictiveness of VantageScore 3.0 credit scores.
The study relates to the recent dialogue surrounding whether or not sold-derogatory trade lines (or, in industry terms, “Sold-Derogs”) should be reported to the credit reporting companies (CRCs) after they have been discharged through bankruptcy.
“Stemming from consumer complaints and lenders’ concerns, we tested VantageScore 3.0 against various factors, and found that Sold-Derogs have minimal impact on a credit score,” said Sarah Davies, senior vice president for analytics, product management and research at VantageScore Solutions. “The results speak for themselves: By removing these data from the calculation of a consumer’s credit score, it does not materially impact the predictiveness of that score.”
The outcome of the study – disclosed in a white paper released today – show that within a sample of 4.3 million consumers (randomly selected from the CRCs), the majority of consumers with a sold-derogatory trade line also had other collection trade line debt. When a sold-derogatory trade line was removed from this type of consumer profile, it resulted in little or no score change. In fact, most (59 percent) of consumers experienced no score change and an additional 28 percent experienced a 1-20 point difference. Ultimately, the study reveals that the majority of these consumer profiles are not affected by the elimination of a sold-derogatory trade line in their credit history.
For more details on the study, visit http://www.vantagescore.com/resource/119 for the white paper available starting today.
About VantageScore Solutions
VantageScore Solutions, LLC (www.vantagescore.com) is the independently managed company that owns the intellectual property rights to the VantageScore credit scoring models, including the VantageScore 3.0 model. VantageScore 3.0 has the capacity to score 30 – 35 million consumers who were previously unscoreable. Initially developed by America’s three national credit reporting companies — Equifax, Experian and TransUnion — VantageScore Solutions’ highly predictive models use an innovative, patented and patent-pending tri-bureau scoring methodology that provides lenders and consumers with more consistent credit scores across all three CRCs. In 2014, nearly one billion VantageScore credit scores were used by over 2,000 lenders and other industry participants, including six of the ten largest banks.