Experian launches new risk forecasting tool amid pandemic
Auto lenders have a new tool at their disposal to help predict credit losses in the face of the COVID-19 economic crisis.
Experian has partnered with management consulting firm Oliver Wyman and Oxford Economics to launch the “Ascend Portfolio Loss Forecaster” as a way to help lenders analyze risk across consumer loan portfolios. The tool is built on the Experian Ascend Technology Platform and was released in response to the pandemic to better analyze risk in uncertain market conditions.
“The forecaster examines over 5,000 credit attributes of a borrower to better understand repayment capabilities,” Greg Wright, chief product officer at Experian said. “Attributes may change when we are forecasting different portfolios like personal, auto or credit cards,” he added.
The credit attributes give a snapshot of the borrower’s capacity, Wright explained. These include a borrower’s credit score, payment delinquencies going back the previous 24 months and average credit utilization in the past 24 months.
Oliver Wyman built the analytical loan-predicting model that encompasses a lender’s risk-taking ability in uncertain markets. The tool has 24 loan models collected from different lenders on different portfolios like student loans, auto loans and mortgages to give a better perspective of the market, Wright said.
“Oxford Economics is providing our tool with 10 macroeconomic scenarios, like change in unemployment rate, real estate indexes, fluctuating auto prices and changing interest rates that drive macroeconomic conditions in the market,” Wright said. “The tool is already integrated with COVID-19-specific macro forecasts to predict unprecedented economic changes.”
Coupling Experian’s consumer data set with constantly evolving macroeconomic conditions will give lenders a better picture of risk associated with a borrower in a specific market condition, Wright said.
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