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Trended Credit Data Attributes in VantageSore 4.0

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VantageScore: Trended Credit Data Attributes in VantageScore 4.0 - 2 EXAMPLES OF CONSUMER TRENDED CREDIT DATA ASSESSMENTS The following examples are intended to show how the inclusion of trended data attributes can enhance consumer risk assessment: Credit Card Balances Fifty-eight percent of Americans carry revolving credit card debt from month to month, which may be an indication of either healthy or risky credit balance trajectories. Consider the case of credit card balances where consumer A reduces his or her balance by $5,400 over four months and consumer B increases by $2,100 over the same period, but both have the same balance at the time their credit score was calculated (Figure 2). By looking only at the balance for the current month, the scores would be similarly impacted by those identical balances. However, when holding all other attributes constant, incorporating the trajectories for the two consumers reveals that consumer A represents a lower risk, and would receive a higher credit score. Credit Utilization Over half of Prime and Superprime consumers have a utilization rate above 30%, the rate considered a benchmark for healthy credit usage. By using the new trended credit data, consumers are rewarded for a history of low utilization rates, rather than just relying on their current standing (Figure 3). Consider the following scenario where consumer A maintained an average utilization of 30% over 12 months versus consumer B's 38%. But, at the time of requesting the credit score, consumer A had a higher current utilization rate. The new attributes look beyond the momentary spike in utilization for consumer A by also taking into account the several months of A's prior healthy credit utilization behavior. Payment Agreements Seventy-seven percent of Prime and Superprime consumers have no late payments on their open accounts, which could reflect a wide variety of healthy repayment behaviors. Using trended data, a consumer's history of repaying obligations can also be analyzed by tracking whether the payments of installment loans are over, under, or as agreed compared to the monthly payment schedule (Figure 4). Consider the case where consumers A and B have a history of under-paying, consumer C repays as agreed, and Consumer D always overpays. If everything else is held constant, Consumer D, with several "over payments," represents the lowest risk, and accordingly receives a higher credit score. Figure 2: Credit Balance Trajectory Figure 3: Average Monthly Revolving Credit Utilization Figure 4: Percentage Over, Under, or as Agreed Payments over a Six-Month Window 33% 100% 67% 33% 33% 33% 100% Consumer A Consumer B Consumer C Consumer D Overpayment% Underpayment % As agreed % Higher risk Lower risk 0% 30% 60% 90% Nov Jan Mar May Jul Sept Consumer A: 30% Consumer B: 38% Average utilization over 12 months 60% 70% $22 $16 $22.0 $16.6 $14.5 $16.6 June July August September Consumer A: $5.4K Consumer B: $2.1K

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