What regulators say

The latest news.

The VantageScore credit scoring model continues to score headlines.

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Since the launch of the VantageScore model in 2006, regulators have regularly proclaimed the importance of protecting choice in the credit score marketplace. Regulators that have recognized the VantageScore model include:

Consumer Financial Protection Bureau Federal Trade Commission
Department of Housing and Urban Development National Credit Union Administration
Federal Housing Administration Office of the Comptroller of the Currency
Federal Housing Finance Agency Securities and Exchange Commission
Federal Reserve Board  

FDIC Deposit Insurance Assessment

A 2012 ruling1 by the Federal Deposit Insurance Corporation (FDIC) changed the way large lenders define and calculate risk for their Deposit Insurance Assessment on higher-risk consumer loans. One of the key changes is that in defining what constitutes a higher-risk consumer loan, the FDIC replaced the traditional three-digit credit score used to set its risk threshold with “probability of default” (PD). Based on the rule, the new definition for a higher risk loan is one that has a 20 percent or higher probability of defaulting in two years.  

The rule impacts a lender’s FDIC assessment, and it allows lenders to uniformly and easily assess risk, regardless of their use of proprietary credit scoring models or the multiple generic credit scoring models now available in the market.

1Source: 77 FR 11, October 31, 2012 at 66,000-66,024

Dodd-Frank

In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act specifically named the VantageScore model in the amendment to Regulation V (Fair Credit Reporting).

For more regulatory comments about the VantageScore model, just click on the links below.

Consumer Financial Protection Bureau

Treasury Department, Federal Reserve, FDIC, FHFA, SEC and HUD

Federal Housing Administration

Federal Housing Finance Agency

Federal Reserve System