Question: Is VantageScore gaining traction in the capital markets?
Many lenders sell consumer loans to institutional investors in the form of asset-backed securities (ABS). Typically, these lenders use the same credit scores they used to underwrite the loans in the investor documentation for these securities.
In recent years, there has been a significant surge in the adoption of Vantagescore credit scores across the market. From 2021 to 2022, there was a remarkable 30% increase in the number of VantageScore credit scores being utilized, amounting to a staggering 19 billion credit scores pulled within the year.
Notably, the rise in the adoption of VantageScore credit scores in the auto lending, personal loans, consumer lending, and credit card markets has been closely aligned with the surge in ABS issuances employing VantageScore as their primary Risk Assessment Tool. In 2022, a whopping $11.5 billion worth of ABS issuances relied on VantageScore as their primary credit risk assessment tool, with over 61% of these issuances ($7.1 billion) backed by auto loans.
2023 ABS Market Trends: The Rising Usage of VantageScore
As of August 2023, the market has already witnessed $9.7 billion in ABS issuances using VantageScore as the primary credit risk assessment tool, and 66% of these issuances ($6.4 billion) were supported by auto loans. If this pace of adoption in the ABS market continues, VantageScore usage is projected to reach $15 billion, marking a substantial 30% increase compared to 2022.
Furthermore, a diverse array of ABS issuers are embracing VantageScore, including some of the largest lenders in the United States, such as Toyota Motor Credit Company, Prosper, and Synchrony.
This remarkable trend is not accidental. Investors are gaining a deeper understanding of risk, and they are also benefiting from a loan pool that promotes diversity and financial inclusion.
For those seeking more information, VantageScore provides comprehensive capital markets research and insights, along with a list of lenders who have securitized loan pools using VantageScore.
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