Millennials Challenged with Inability to Obtain a Credit Score
STAMFORD, Conn.–(BUSINESS WIRE)–A survey commissioned by VantageScore
Solutions found that U.S. consumers want to see a shift in the
credit scoring industry from an industry dominated by one developer to a
marketplace characterized by competition and innovation. The survey
revealed that across the board, consumers consider the fact that they
have multiple credit scores positively.
The phone survey, of a representative sampling of more than 1,000
consumers, reveals that the majority of U.S. consumers support newer
methods of calculating credit scores and that most Americans also
support competition among developers of credit scoring models. Survey
respondents expressed approval for multiple features of modern credit
scoring models, including recognition of positive payment histories for
rent, utility, and telecomm bills.
A plurality of the National population (49%) and a slight majority of
Millennials (51%) believe that rent payments should be factored into
credit scores, rather than consigned to separate specialty scoring
models (38% and 40% respectively).
Across the board, consumers take a positive view toward having
multiple credit scores, from different models. In fact, only four
percent of U.S. consumers who have been scored by more than one credit
scoring model viewed having multiple scores negatively, while over 55
percent characterized the trend as positive.
The survey also explored the extent to which consumers may be positively
impacted by credit scoring models that exclude paid third-party
collection accounts. Approximately five percent of Americans report
having a paid off collection account (an estimated 12 million), which
are excluded from consideration in VantageScore 3.0., VantageScore
Solutions’ latest credit scoring model.
“The results of this survey clearly demonstrate that consumers prefer
competition in the credit scoring marketplace, and that they welcome
important innovations VantageScore has delivered to a market that
previously lacked the motivation to better serve lenders and consumers,”
said Barrett Burns, president and CEO of VantageScore Solutions. “Our
model provides a highly accurate credit score along with important
benefits for consumers and lenders, which ultimately helps to match
consumers to the right types of credit products and credit granters.”
MILLENNIALS CITE BEING UNSCOREABLE AS OBSTACLE TO CREDIT ACCESS
The VantageScore survey oversampled the Millennial population to help
industry participants better understand and serve their credit needs.
Among the findings included:
48% of Millennials said the reason they could not obtain credit is
because of a lack of credit history as a young adult.
Among those who at one point were unable to obtain a credit score, the
inability to get a credit card was the most common impact.
42% of Millennials said that limited credit history caused them the
inability to obtain the credit they need.
“Lenders and policy makers need to take notice that massive populations
of Millennials fail to meet the minimum criteria associated with
conventional credit scoring models, whereas many would be scoreable when
updated models, such as the VantageScore 3.0 model, are employed,” added
Burns. “These consumers are reachable, scoreable and can be made
eligible for automated underwriting systems in a safe and sound manner.
They are seeking credit products and credit cards in particular. Many
are very attractive potential borrowers, and lenders using outdated
credit scoring models are missing opportunities to win their business
and their loyalty.”
Survey results are available via an infographic
that is posted on VantageScore Solutions’ website.
The survey was conducted by FTI Consulting and commissioned by
VantageScore Solutions. Survey questions were delivered via telephone.
The audiences included a national sample of 1,000 U.S. adults over the
age of 18 and an additional oversample of Millennials (ages 18 – 34).
The survey was fielded between July 28 and August 16, 2015.
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.
Jeff Richardson, 203-363-2170