FICO recently announced that its new FICO® Score 10 T, set to be released this summer, will include trended data. With this new option for lenders, trended data remains a buzz-worthy topic.
What is trended data?
Simply put, trended data solutions analyze a set of data over a specific period of time. It is becoming increasingly common as companies look to expand their customer base and improve risk decisioning. This is because trended data helps identify patterns of past behavior -- and these behavior patterns can be used to predict future behavior. So, why do these predictions matter? The predictive nature of trended data helps strengthen analytics and model development, thus helping companies refine business strategies to more profitably grow their portfolio and better assess risk. Trended data helps businesses in three critical ways:
1. It provides a different picture than traditional credit data alone or a traditional credit score.
A traditional credit score is a snapshot of a consumer’s credit profile at a specific point in time. Two consumers seeking credit may have the same score, but over a period of time may have exhibited very different financial behaviors. For example, two consumers may both have a traditional, point-in-time credit score of 720. Consumer A may be using increasingly more credit over time and paying less each month.
Meanwhile, consumer B may be paying much more than the monthly minimums, driving down his or her total balances. Though both consumers reflect the same traditional score, they exhibit two very different spending and payment behaviors.
Trended data solutions analyze a set of data over a specific period of time -- more like a short video than a picture -- to identify patterns of past behavior.
These patterns can be indicative of future behavior. As with the example above, a trended data solution would better help a lender understand the differences between consumer A and consumer B. As a result, the lender could make a more informed credit decision.
2. Trended data can benefit both lenders and consumers.
How lenders can realize the benefits of trended data:
- An expanded universe of marketable customers
- Increased predictive power that can mitigate risk
- The ability to more proactively monitor portfolios
How consumers can realize the benefits of trended data:
- A history of improved credit management can be displayed to lenders
- New credit offers or extensions can be presented for their consideration
- Qualifying for better rates or terms can them save money
3. The value of trended data can be realized through a variety of available solutions.
To help businesses capitalize on the value of trended data, Equifax incorporates trended data into many existing solutions, including:
And, explore a curated selection of trended data blog posts, including a 5-part series:
Part 1: Trended Data – Becoming Mainstream
Part 2: Trended Data – Benefits to Lenders
Part 3: Trended Data – Impact on Credit Decisions
Part 4: Trended Data – Drive Profitable Growth While Minimizing Risk
Part 5: Trended Data – Minimize Risk and Head-Off Default