Consumer Credit Score Migration: Will the Consumer I Approve Today Still be Credit-Worthy Tomorrow?

April 26, 2016         By: Mike Dautner

A credit score model incorporates consumers’ history of managing credit to determine how likely they are to manage credit going forward.
Consumers’ behaviors in the distant past contribute less to a credit score while recent behaviors contribute more significantly.
Consumers with stable credit management practices have more stable credit scores and typically experience only small changes in their scores as a result of individual trade lines.
Conversely, volatile practices generally result in more significant changes to consumers’ credit scores.

A key question for lenders using credit scores is: How will future events impact a consumer’s credit score? An obvious concern is that the consumer was approved for credit given their score exceeded the lender cut-off at the time of evaluation, but may fall below the cut-off soon after the evaluation time.

Lenders are also interested in the number of consumers who fail to obtain credit because their scores fall below a lender’s minimum, but then improve their credit scores to a level greater than the lender’s minimum either 3 or 12 months later.

Read the full whitepaper from VantageScore here: