TransUnion launches risk-scoring model for alternative lenders

by Francis Monfort26 Aug 2018

TransUnion has introduced a new predictive risk-scoring model for alternative lenders which combines alternative credit data with traditional static and trended credit data.

With the launch of the CreditVision Link Short-Term Risk Score, TransUnion seeks to provide greater predictive power for enhanced underwriting decisions. The model allows lenders to better segment and evaluate consumer risk profiles and identify consumers with a good track record across the alternative and traditional credit markets.

“Nearly 75% of consumers active in the alternative credit market have one or more open traditional tradelines. Alternative credit data alone does not provide a comprehensive view of subprime consumers or tell their whole story, but when combined with traditional, particularly trended data, it can yield powerful results,” said Liz Pagel, vice president of consumer lending market strategy at TransUnion. “Understanding whether a consumer is making payments on her traditional credit is valuable information for alternative lenders.”

TransUnion’s new offering builds upon its acquisition of alternative credit bureau FactorTrust late in 2017. The score harnesses FactorTrust’s legacy risk scores as well as traditional and alternative credit data to help lenders better understand the consumer’s full risk profile.

The Short-Term Risk Score is developed on alternative loan performance outcomes exclusively sourced from FactorTrust’s alternative credit database, which includes Fair Credit Reporting Act-compliant, proprietary information on alternative loans.

Additionally, the risk score offers more precision compared with generic models with its variants that are tailored for short-term, installment, and virtual rent-to-own markets.

TransUnion has scheduled a webinar called Alternative Loan Insights with TransUnion Risk Scores on August 30 to discuss the benefits of the new risk score.