According to a recent Ponemon Institute study, 44 percent of consumers who were notified about a data breach believed the breached company was hiding something. When data breaches occur, it is extremely important to be there for customers and to address their concerns. When companies hide a data breach, impacted consumers begin to suspect the breach is actually much worse than the company claims, and trust in the organization begins to wane. Find out more by downloading the data breach case study of lessons learned from the field.

Gone are the days when validating scoring models was a thing you did when you got around to it. Besides that fact that the OCC wants models validated at least once a year, it’s just good business sense to make sure your tools are working as expected. At a minimum, the OCC wants back testing, stress testing, benchmarking and sensitivity analysis, but there is another aspect to validations that needs to be taken into consideration. Most lenders do not rely exclusively on a scoring model of their decisioning (or at least they shouldn’t). Whether it’s a dual score strategy or attribute overlay, additional underwriting criteria is often used to help refine and optimize decision strategies. However, those same overlays need to be incorporated into the model validation process so that the results are not misleading. VantageScore® Solutions, LLC has just published a concise white paper offering excellent examples of how to make sure your overlay criteria are an integral part of the overall validation process, ensuring your effort here are yielding the right results. And while on the topic of model validation, next time I’ll review what to do when you have no idea what to test for. Stay tuned!

When validating a model in the presence of overlay criteria, it is important to remember that any metrics computed at the aggregate portfolio level will not be indicative of the model's true performance. While traditional validation methodologies and portfolio metrics may provide directional insight into model performance, the overlay strategy is an additional variable that must be accounted for in each step of the validation analysis. An effective validation should include: Establishment of an appropriate base line Piece-wise validation of overlay segments An overlay strategy analysis Do you have model validation questions? Learn more and transform your business goals with Experian's Analytical Consulting Services. Source: VantageScore® Solutions LLC white paper: Validating a Credit Score Model in Conjunction with Additional Underwriting Criteria. VantageScore® is owned by VantageScore Solutions, LLC.