Trended Data and Consumer Credit - Good News for Consumers
Sure, it's been a week since the Bronco's won the Super Bowl but that doesn't mean we can't help consumers understand their credit score and trending data with a football analogy!
When the powers that be make predictions for who is going to win the Super Bowl, there are a variety of factors that analysts assess--injuries, player specific statistics, Super Bowl experience etc. All of these factors make a difference in predictions, and whether a team is trending upward or downward. The score of the game does not give a full indication of a team's ability, or trend.
Similarly to consumer credit, a snapshot at any given moment in time of a consumer's credit score does not tell the full story about that consumer's credit history and how they arrived at their current credit score.
Experian, one of the three credit reporting agencies, released an article last week that helps understand how credit agencies view a consumer's trended data when making credit decisions.
"...Trended data can be attached to balances, credit limits, minimum payment due, actual payment and date of payment.
By assessing these areas on a consumer file for 24 months, more insights are delivered and lenders can take note of behavior patterns to assist with risk assessment, marketing and share-of-wallet analysis.
For example, looking closer at those consumers with five trades or more, Experian trended data reveals:
27% are revolvers, carrying balances each month
27% are transactors, paying off large portions, or all of their balances
9% are rate surfers, who tend to frequently transfer balances to credit cards with 0% or low introductory rates."
Credit agencies viewing trended data versus a snapshot credit score is a highly beneficial change for consumers. Increasing your credit score over time through various opportunities such as maintaining low monthly balances and on-time payments gives credit agencies an idea of what to expect from you as a consumer over time, and will allow for more leniency in future purchases.