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Special Edition

TransUnion Supports Federal Reserve Board's Findings on Credit Scoring
The Federal Reserve Board's division of Research and Statistics' study concerning the effect credit scoring has on the availability and affordability of credit on various population segments was mandated by Section 215 of the 2003 Fair and Accurate Credit Transactions Act of 2003 (FACT Act).

"For more than 20 years, using credit information and scoring models has created financial advantages for millions of consumers and businesses domestically and internationally, granting them access to the credit they deserve, while effectively managing risk," said TransUnion's Chet Wiermanski, group vice president, Analytic and Decision Services. "Once again, the Federal Reserve Board's study validates the predictability, objectivity and benefits of credit scoring."

The study considered public comments submitted specifically for the report and past research on the topic. In addition, the FRB used a representative sample of more than 300,000 de-personalized credit records of the same individuals from two distinct points in time (June 30, 2003 and December 31, 2004). This allowed the FRB to create its own generic scoring model to compare its findings with TransUnion's proprietary generic risk scoring model and VantageScoreSM, the industry's newest scoring model.

The study further concluded that credit scoring "increases the efficiency of consumer credit markets by helping creditors establish prices that are more consistent with the risks and costs inherent in extending credit." The study also recognized on average, the inclusion of specific individual credit characteristics used in credit scoring models has no adverse affect on credit scores for the general population.