TransUnion’s Trended Data to Support Fannie Mae Mortgage Initiative
Trended data can improve risk analysis
TransUnion (NYSE:TRU), the first credit reporting agency to bring trended consumer credit data to market with its CreditVision® suite of solutions, applauds Fannie Mae’s decision to utilize this enhanced information in the assessment of mortgage applicants. While details of Fannie Mae’s plan are still forthcoming, their use of trended credit data, starting in mid-2016, has the potential to benefit mortgage borrowers by providing Fannie Mae and mortgage lenders a more comprehensive view of a borrower’s historical credit performance.
“CreditVision is an innovation that has had a dramatic impact on how lenders utilize credit information within their lending strategies. The use of trended credit data by mortgage lenders has the potential to help millions of people access the opportunities that lead to a better quality of life,” said Jim Peck, TransUnion’s president and chief executive officer. “As a global leader in risk and information solutions, we recognize the importance and benefits of using Information for GoodSM.”
A recent TransUnion analysis found that the use of trended data can potentially impact vast numbers of consumers in the housing market through better pricing and access to mortgage loans. TransUnion research indicates that the percentage of consumers in the Super Prime risk tier, who generally have the greatest access to new loans at the lowest pricing, would increase from 12% of the population to nearly 21%.
TransUnion began work on bringing trended credit data to market more than five years ago, and launched CreditVision – the first-ever suite of solutions to utilize such data – in January 2013. Internationally, TransUnion has launched its trended credit data solution in Canada and Hong Kong and the capability is also being pursued in many additional markets across the globe. Hundreds of financial services and insurance companies have already adopted or are currently evaluating CreditVision solutions with many of them experiencing substantial performance lift in underwriting, acquisition and account management strategies. These improvements have allowed lenders to approve more consumers for credit while offering better loan terms based on the improved insights.
Trended Credit Data
TransUnion’s CreditVision suite of solutions helps to enhance lending decisions by leveraging an expanded view of credit data that includes up to 30 months of historical payment amounts and credit performance, where available, on loan accounts. CreditVision risk scores include the addition of actual payment amounts and trended data on accounts, data that are new to the credit report and not included in any other traditional risk scores today.
This expanded view of credit data can reveal trends and behaviors, such as consumers making on-time payments, paying more than the minimum amount due on credit cards and installment loans, reducing total amounts borrowed or decreasing utilization over time. These trends cannot be seen on standard versions of the consumer credit report or by any of the traditional risk scores that use the more limited credit report.
“The majority of lenders have been reporting actual payment amount to TransUnion on a consistent basis, and we’re pleased to see this trend,” said Peck. “Now innovative lenders are able to use this information as an additional insight and powerful component in their underwriting strategies. This means borrowers who do business with these lenders could realize improved access to credit. We commend Fannie Mae’s decision to incorporate these data elements within the mortgage lending process.”
Adding Alternative Data
TransUnion also released CreditVision® LinkSM in October of this year, the first credit score in market to combine both trended credit bureau data and alternative data sources – creating a more precise picture of consumer risk and their ability to manage financial commitments in a single point. CreditVision Link allows lenders to score approximately 95% of the U.S. adult population, including tens of millions of consumers who cannot be scored by traditional credit scores. Over 40 lenders have assessed or are currently assessing this score.
“TransUnion is innovating with a broad array of solutions that combine these data elements – such as trended and alternative data – with new TransUnion technologies and analytics to help lenders make better decisions and ultimately evaluate more consumers,” said Steve Chaouki, executive vice president in TransUnion’s financial services business unit. “At TransUnion, we are proud to work closely with our lending customers to help them serve the millions of Americans seeking a better life for themselves and their families. Solutions like CreditVision and CreditVision Link can help broaden the banked populations and help to expand consumer choice.”
About TransUnion (NYSE: TRU)
Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.
We call this Information for GoodSM. http://www.transunion.com/business
Fannie Mae enables people to buy, refinance, or rent homes.Visit us at: http://www.fanniemae.com/progress.