Tag: VantageScore

Roughly 70 percent of credit scores change by up to 20 points in any given 90-day window. Most consumers experience a score improvement rather than a score drop, with 56 percent of consumers shifting higher, 34 percent shifting lower and 10 percent staying the same.

Bankcard originations have continued to increase, with Q3 2012 originations increasing 32 percent over Q3 2011. On average, 66 percent of the population now holds one or more bankcards. However, the percentage of consumers who have a bankcard varies greatly by VantageScore® tier:

As of Q2 2012, subprime borrowers are carrying the largest retail card balances, with an average card balance per account of $620 and $700 for VantageScore® credit score D and F tiers, respectively. The national average balance on a retail account is $329 — an increase of 39 percent over 2011. VantageScore® credit score A tier (super-prime) consumers carry the lowest average balance at $99 per account. Source: Experian-Oliver Wyman Market Intelligence Reports. VantageScore® is owned by VantageScore Solutions, LLC.

Not surprisingly, bankcard utilization is the highest among subprime consumers with VantageScore D and F tiers having average bankcard utilization rates of 68% and 81% respectively. In comparison, VantageScore A tier (super prime) consumers had an average bankcard utilization rate of 6% and VantageScore B tier (prime) consumers had an average bankcard utilization rate of 15%. Join our panel of experts on October 23 to hear from industry experts on key regulations that are changing the way banks need to conduct business in order to grow and stay profitable. Source: Experian Oliver Wyman Market Intelligence Reports.

In Experian's recent State of Credit study which analyzes credit scores in more than 100 cities, Minneapolis took the number one spot, with an average VantageScore® credit score of 787. The Midwest dominated the top 10 spots in the rankings and Wisconsin consumers continue to demonstrate their credit savvy, with four of the state's metropolitan areas making the top 10 list for the second year in a row. Top 10 highest average credit scores by city VantageScore® credit score rank City State Average VantageScore® credit score 1 Minneapolis MN 787 2 Madison WI 786 3 Wausau WI 785 4 Sioux Falls SD 784 5 Cedar Rapids IA 783 6 San Francisco CA 783 7 Green Bay WI 781 8 La Crosse WI 779 9 Boston MA 778 10 Duluth MN 777   View an interactive map and read the complete results of the State of Credit 2012 study. Source: Experian's State of Credit 2012 study VantageScore® is owned by VantageScore Solutions, LLC.

The average bankcard balance per consumer in Q2 2012 was $4,170, which is 4 percent higher when compared to the same quarter of the previous year. VantageScore A and VantageScore B tiers (super prime and prime) saw bankcard balances increase by 31 percent and 11 percent respectively, while all other VantageScore® tiers experienced annual balance decreases during the same timeframe. Listen to our recorded Webinar on consumer credit trends from the Q2 2012 Market Intelligence Reports, including bankcard trends and an in-depth look at the current state of the U.S. real estate market. Source: Experian Oliver-Wyman Market Intelligence Reports VantageScore® is owned by VantageScore Solutions, LLC.

When it comes to short sales, a status of "account paid in full for less than full balance" or "settled" will still have a negative impact on a credit score because it means the debt was not paid in full as agreed. According to VantageScore® Solutions LLC, a mortgage loan settled through a short sale typically results in a change of 120 to 130 points to the VantageScore® credit score. A foreclosure generally causes a decline of 130 to 140 points. The impact of the short sale or foreclosure will vary since scores take into account the individual's overall credit history. VantageScore® is owned by VantageScore Solutions, LLC. Register now for a detailed overview of consumer credit trends from the Q2 2012 Market Intelligence Reports. Also during this event, we'll take an in-depth look at understanding the current state of the U.S. real estate market. Source: The Ask Experian team advice blog.

Some borrowers who are deemed subprime by traditional credit scoring criteria are actually quite creditworthy and are identified as prime or near-prime consumers when using the more inclusive VantageScore® credit score. Based on a VantageScore® Solutions' study of infrequent users of credit, 15.5 percent were found to have either prime or super-prime risk. In addition, among new entrants to the credit scene — including students who recently graduated, immigrants and recently divorced consumers — 26.5 percent were found to have either prime or super-prime risk profiles. Learn more about VantageScore® Solutions, identified as a Preferred Partner by the National Association of Federal Credit Unions (NAFCU). Source: VantageScore Solutions summer 2012 newsletter, The Score VantageScore® is owned by VantageScore Solutions, LLC.

A recent study compiled by VantageScore® Solutions found that default risk associated with mortgage originations has improved. The likelihood that a borrower will become 90 or more days past due after a mortgage has been originated was 2.5 percent in 2011, far lower than in 2009, where it hovered at 7 percent. Get your VantageScore® credit score. Source: View the complete VantageScore Solutions 2011 Annual Validation study. VantageScore® is owned by VantageScore Solutions, LLC.

The average bankcard balance per consumer rose to $4,359 in Q1 2012 – an 8 percent increase from the previous quarter. The increase resulted primarily from balance increases to VantageScore® A and B segments, which increased 31 percent and 11 percent, respectively. Download the latest Experian industry white papers. VantageScore® is owned by VantageScore Solutions, LLC.

The strongest growth in new bankcard accounts is occurring in the near-prime and subprime segments of VantageScore® credit score C, D and F. Year-over-year (Q1 2011 over Q1 2010) growth rates of 20 percent, 46 percent and 53 percent were observed for each of the respective tiers. Listen to our recent webinar featuring bankcard credit trends Source: Experian-Oliver Wyman Market Intelligence Reports

A recent Experian credit trends study showcases the types of debts Americans have, the amounts they owe and the differences between generations. Nationally, the average debt in the United States is $78,030 and the average VantageScore® credit score is 751. The debt and VantageScore® credit score distribution for each group is listed below, with the 30 to 46 age group carrying the most debt and the youngest age group (19 to 29) carrying the least: Age group Average debt Average VantageScore® credit score 66 and older $38,043 829 47 to 65 $101,951 782 30 to 46 $111,121 718 19 to 29 $34,765 672   Get your VantageScore® credit score here Source: To view the complete study, please click here VantageScore® is owned by VantageScore Solutions, LLC

For as long as there have been loans, there has been credit risk and risk management. In the early days of US banking, the difficulty in assessing risk meant that lending was severely limited, and many people were effectively locked out of the lending system. Individual review of loans gave way to numerical scoring systems used to make more consistent credit decisions, which later evolved into the statistically derived models we know today. Use of credit scores is an essential part of almost every credit decision made today. But what is the next evolution of credit risk assessment? Does that current look at a single number tell all we need to know before extending credit? As shown in a recent score stability study, VantageScoreSM remains very predictive even in highly volatile cycles. While generic risk scores remain the most cost-effective, expedient and compliant method of assessing risk, this last economic cycle clearly shows a need for the addition of other metrics (including other generic scores) to more fully illuminate the inherent risk of an individual from every angle. We’ve seen financial institutions tightening their lending policies in response to recent market conditions, sometimes to the point of hampering growth. But what if there was an opportunity to relook at this strategy with additional analytics to ensure continued growth without increasing risk?  We'll plan to explore that further over the coming weeks, so stick with me.  And if there is a specific question or idea on your mind, leave a comment and we'll cover that too.

As we kick off the new year, I thought I’d dedicate a few blog posts to cover what some of the consumer credit trends are pointing to for potential growth opportunities in 2012, specifically on new loan originations for bankcard, automotive and real estate lending. With the holiday season behind us (and if you’re anything like me, you have the credit card statements to prove it!), I thought I’d start off with bankcards for my first post of the year. Everyone’s an optimist at the start of a new year and bankcard issuers have a right to feel cautiously optimistic about 2012 based on the trends of last year.  In the second quarter of 2011, origination volumes grew to nearly $47B, up 28% from the same quarter a year earlier.  Actually, originations have been steadily growing since the middle of 2010 with increasing distribution across all VantageScore risk bands and an impressive 42% increase in A paper volume.  So, is bankcard the new power portfolio for growth in 2012? The broad origination risk distribution may signal the return of balance-carrying consumers (aka:  revolvers) from those that pay with credit cards, but pay off the balance every month (aka: transactors).  The tighter lending criteria imposed in recent years has improved portfolio performance significantly, but at the expense of interest fee profitability from revolver use.  This could change as more credit cards are put in the hands of a broader consumer risk base.  And as consumer confidence continues to grow, (it reached 64.5 in December, 10 points higher than November according to the Conference Board) , consumers in all risk categories will no doubt begin to leverage credit cards more heavily for continued discretionary spend, as highlighted in the most recent Experian – Oliver Wyman quarterly webinar. Of course, portfolio growth with the increased risk exposure requires a watchful eye on the delinquency performance of outstanding balances.  We continue to be at or near historic lows for delinquency, but did see a small uptick in early stage delinquencies in the third quarter of 2011. That being said, issuers appear to have a good pulse on the card-carrying consumer and are capitalizing on the improved payment behavior to maximize their risk/reward payoff.   So all-in-all, strong 2011 results and portfolio positioning has set the table for a promising 2012.  Add an improving economy to the mix and card issuers could shift from cautious to confident in their optimism for the new year.  

By: Kari Michel The way medical debts are treated in scores may change with the introduction of June 2011, Medical Debt Responsibility Act. The Medical Debt Responsibility Act would require the three national credit bureaus to expunge medical collection records of $2,500 or less from files within 45 days of their being paid or settled. The bill is co-sponsored by Representative Heath Shuler (D-N.C.), Don Manzullo (R-Ill.) and Ralph M. Hall (R-Texas). As a general rule, expunging predictive information is not in the best interest of consumers or credit granters -- both of which benefit when credit reports and scores are as accurate and predictive as possible. If any type of debt information proven to be predictive is expunged, consumers risk exposure to improper credit products as they may appear to be more financially equipped to handle new debt than they truly are. Medical debts are never taken into consideration by VantageScore® Solutions LLC if the debt reporting is known to be from a medical facility. When a medical debt is outsourced to a third-party collection agency, it is treated the same as other debts that are in collection. Collection accounts of lower than $250, or ones that have been settled, have less impact on a consumer’s VantageScore® credit score. With or without the medical debt in collection information, the VantageScore® credit score model remains highly predictive.