TransUnion Announces Consumer Credit Scores Are Rising

TransUnion, a leading global information solutions company, today announced that its proprietary TransUnion Risk Index is the lowest it has been in five years in the U.S. The TransUnion Risk Index measures the relative risk of default with the lower the value the better the credit risk. The Index has improved from 120 in 2000 to 109 in 2005. The consumer-based index is an example of TransUnion’s comprehensive enterprise risk management solutions. It allows risk managers to evaluate credit conditions by geography over an extended period of time.

In addition, TransUnion announced that the median consumer credit score has risen six points – from 676 to 682 – since the first quarter of 2004. Consumer credit scores have gradually been rising over the last two years, but this marks the first substantial increase since the second quarter of 2000. Both announcements were made at the 2005 Risk Management Association’s Annual Risk Management Conference in Washington D.C.

“Changes in the TransUnion Risk Index are a reflection of a variety of factors that include population shifts, regional and national economic conditions and location-specific trends in lending and credit usage,” said Chet Wiermanski, vice president of Analytics for TransUnion. “And while the TransUnion Risk Index is important, its true value to risk managers comes when it is coupled with our other research capabilities and services.”

The data behind these figures come from TransUnion’s Trend Database, which consists of a quarterly snapshot of 25 million anonymous consumers randomly sampled from TransUnion’s national consumer credit database. Each consumer record contains more than 200 credit variables that illustrate consumer credit usage and performance. Information has been aggregated at the county, Metropolitan Statistical Area (MSA), state and national-level since 1992 and is available to TransUnion business customers.

Through its enterprise risk management services, TransUnion can help risk managers manage competitive and credit risks and identify up-and-coming markets. Included in TransUnion’s solution offerings are applications such as:

• Benchmarking – provides a comprehensive snapshot of the overall U.S. consumer credit landscape with the ability to customize behavior comparisons between geographical areas. Risk managers can use this analysis to understand how individual portfolios compare to the general market and identify the market forces impacting customer efforts (comparisons of delinquency rates, bankruptcy rates, risk levels, market share and wallet share).

• Trend Analysis – enables risk managers to evaluate changes in the “credit landscape” over time and identify trends in consumer financial behavior. Risk managers can use this analysis to understand and track portfolio changes in the general level of consumer risk nationally or geographically.

• Forecasting – arms risk managers with one of the industry’s best available predictions for the U.S. consumer credit market during the next 18-24 months. Forecasts are based on both historical consumer financial behavior and macroeconomic indicators. The analysis can predict shifts in overall market risk and allows risk managers to stress test scenarios. It allows risk managers to determine how much credit and macroeconomic indicator changes will affect the consumer financial landscape in order to better understand and manage profits and losses.

“These services give risk managers the ability to anticipate market trends and determine when more rigid standards for credit granting decisions may be necessary,” said Michael Manaton, director of Enterprise Risk Management Solutions for TransUnion. “Through our consultative approach, TransUnion applies a balanced method to our data analysis to give customers actionable information to better manage their portfolios.”