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Trended Credit Data for Precise Decisioning

Tony Terrazas
Blog Post10/14/2015
Score with Greater Precision

Lenders: Imagine everything you know and use today to assess creditworthiness, but deeper, broader, richer and more precise. That is the power of trended credit data.

In order to survive and thrive in today’s competitive environment, lenders are looking to gain an edge with a better understanding of potential consumer risk and actionable insights into future credit behavior.

Trended credit information now available fuels risk scores that have proven to be more predictive of a consumer’s future credit performance than traditional scores – which are limited to point in time credit information without actual payment amount or past behavioral trends.

If the consumer picture became clearer with deeper insights into actual payment data, lenders could better evaluate new applicants and existing accounts to help them grow their portfolios more effectively without increasing risk. The addition of trended credit data yields a more precise risk score – giving lenders greater control and confidence in assessing creditworthiness.

Scores powered by trended data leverage more dynamic information than ever before, like:

  • Current actual payment amount for each tradeline, as reported
  • Extended account-level payment patterns up to 82 months back
  • 30 months of account history data for each tradeline.
  • Payment amount, Current balance, Credit limits, High credit, Past due amount

Trended credit data empowers lenders with more credit information across a longer span of time. These elements bring into view key consumer trends including balance migration, retail and bankcard spending patterns, payment levels and ratios, and wallet share preference.

For example: Consider a consumer with 30 months of balance history vs. the traditional one-snapshot in time of a consumer’s current balance. With trended balance data a lender can see the trajectory of a consumer’s aggregate credit balance is trending down. Studies have proven that consumers with pay-down behavior are generally less risky than those who have been building balances. This information can be reflected in a higher credit score that can net an approval when the consumer may have previously been denied, or approved at a higher interest rate. A recent study found the super prime customer base could expand by more than 23 million U.S. consumers when using a score that incorporates trended data.

Learn how trended data can  pave the way for mortgage credit innovations

Data never available before – a longitudinal or trended view, payment data, plus improved reasons codes and consumable algorithms, help build upon the data lenders use today to provide these types of balance trajectory insights.

Predictive risk scores leveraging trended credit data is an enhanced way to evaluate consumers – and can open the door for millions of people to access credit and gain better lending terms. Trended data can reveal the true directional path of a consumer’s credit usage and generate insights into past payment behavior in order to determine future behavior.

With trended data, lenders can improve their decision making across the customer lifecycle by engaging the most qualified prospects, acquiring more risk-appropriate consumers, and managing their customer relationships to grow wallet share and loyalty.

The future of credit decisioning lies in trended credit data – destined to be the industry standard for credit underwriting, prescreen marketing and portfolio management.

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