Posted by Jonathan Forrester on 07 April 2016 11:29 AM
What does this mean for you?
Confident credit risk underwriting is contingent upon successfully predicting consumer behavior in the future. The ability to see how a consumer’s credit activity is evolving over time, or trended credit data, provides you insight into behaviors and patterns, which can be used to help make stronger, more confident lending decisions.
What is trended credit data?
Trended credit data provides a sequence of 24 months of the borrower’s payment patterns, and offers a historical perspective of specific consumer payment behavior – including scheduled payments, actual payments and past balances. This expanded, two-year, granular viewpoint of the consumer creates the opportunity to extract meaningful statistics to help predict future behavior.
Gain deeper customer insight
Using trended credit data will help mortgage lenders examine how consumers are managing their credit accounts over time. Today, you can see consumers’ existing balances and determine whether they have paid their bills on time; however, you cannot tell if consumers are consistently carrying debt loads on revolving accounts, such as credit cards, or whether they pay their balances in full every month.
For example, a consumer with a large credit card balance who pays in full every month (a “transactor”) likely has a higher level of creditworthiness than a consumer with a large credit card balance who only makes the minimum required payment (a “revolver”). Existing credit reports can’t always differentiate between these two types of consumers.