Standard & Poors has fully integrated VantageScore into LEVELS 6.6, the rating agency's U.S. mortgage analytical model.
VantageScore is the borrower credit score jointly developed by the three national credit reporting companies Equifax, Experian, and TransUnion.
It was designed as a benchmark of borrower credit risk and likelihood of repayment. It is derived using a statistical method based on the borrowers credit history and leverages the same algorithm across all three major credit reporting firms. Its scoring methodology offers lenders with a consistent interpretation of consumer credit files across all three major credit reporting companies as well as the ability to score a broad population.
S&P conducted an analysis of VantageScore to determine if the score was a good way way to measure borrower risk. This independent analysis found that VantageScore is an acceptable option for S&P in for its U.S. RMBS ratings analysis.
.With the acceptance of the VantageScore into our model, LEVELS will be able to offer the market even greater transparency and insight into the performance and surveillance of RMBS securities, said David Goldstein, managing director at the rating agency. It will also provide banks greater flexibility in using LEVELS as a risk management tool in monitoring their whole loan mortgage portfolio.
Standard & Poors acceptance of VantageScore further supports the predictiveness of the score and will provide new insight into the securitized mortgage loan market, said Barrett Burns, president and CEO, VantageScore Solutions.
S&P's LEVELS is a dynamic risk analytics system that encompasses residential mortgage loan characteristics, regional economic data and borrower data. LEVELS analyzes a loan (or pool of loans) and assigns a S&P Risk Grade. It also determines the foreclosure frequency, loss severity as well as credit enhancements needed for securitization.