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Q2 U.S. Economic and Credit Trends Outlook - FAQ

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2 2. How do the average credit scores and LTVs for each category compare during the peak and 2017? The assumption is that lending standards have tightened so the risk with the dollar is much lower now. a. It's a great question, and it's an opportunity to discuss the reports we produce. The figure to the right shows the three versions of Credit Trends Reports that we do. The green and the blue are produced monthly and are available to you from your Equifax sales representative. The orange one, however, is available on our website at https://investor.equifax.com/news-and-events/events-and- presentations and addresses this specifically, in that we present the median credit score in the 10th percentile credit score for each of the major trade lines. The question is exactly spot on, that while the levels of debt now are much higher, in all categories except student loans, the underwriting criteria are much, much stricter now, both on a credit score and across all the other underwriting criteria. Loans today are written to a much higher standard, so the overall risk, even with an economic stress, if it were to happen, is much lower than it was going into the great recession. The interest rates are also at historic lows, which make the payments on the outstanding debt more affordable. 3. Where do market place lenders such as Lending Club fall in this? Where does unsecured credit fit into this picture? Goldman's Marcus is on a huge growth trajectory and not alone in steep growth. a. Unsecured personal loans and what's known as market place loans generally are part of the consumer finance category, but that also includes other types of secured and unsecured loans such as boats, RVs, farm equipment and some other personal finance. In an upcoming webinar, we intend to highlight the unsecured personal loans in more detail. Besides Goldman's "Marcus," we also have LendingClub, SoFi, Upstart, Greensky and Freedom as examples of lenders actively engaged in this sector. They are changing the nature of the personal loan space, by offering longer term loans for larger amounts than what has been typical, and they are also looking at alternative data for their underwriting decisions. 4. How much of a factor are vehicle leases in the auto sector? a. Auto leases make up 12.4% of outstanding auto accounts and only 7.3% of auto balances as of March 2018. Leases are also more common on new vehicles and less common in subprime lending. With a shift towards SUVs and trucks from sedans, loans are growing somewhat faster than leases.

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