Lenders have historically used credit scoring models based only on customers’ past credit history. Since economic conditions change quickly and are often different than those that prevailed historically, credit decisions based on credit scores developed using historical information available to lenders. CreditForecast.com provides lenders with a method to incorporate forward-looking economic information into credit decisions.
Benchmarking can be done across product lines and down to a detailed geographic level to assess credit growth and risk. Historically, benchmarking has been done solely vis-à-vis specific competitors. CreditForecast.com enables you to benchmark against the entire industry, to identify risks and opportunities that cannot be determined by benchmarking against a self-identified set of peers.
Most P&L forecasting done at a portfolio level does not take into account the changing economic environment, with models that are commonly based on historical roll rates that remain constant regardless of economic conditions. However, roll rates are highly dependent on the health of the job market and broader economy. Our solution solves this problem by providing forecast models that account for credit and economic variables.
Just how important are falling unemployment or rising interest rates to loan growth and credit quality? Do they vary significantly across product lines and regions of the country? With CreditForecast.com, you can determine whether a strongly expanding economy experiencing lower unemployment, but higher inflation and interest rates will have a negative impact on the credit quality of your mortgage versus credit card portfolios.
Do interest rate spreads on ABS and MBS pools adequately reflect current and prospective economic and credit conditions? Are interest rate spreads appropriately discounting regional economic and credit differences across pools? With CreditForecast.com, you can evaluate earnings growth prospects and stock price valuation of lending institutions.
Certain lenders may be at heightened risk of suffering credit losses, given their regional and product line exposure. For example, mortgage lenders in California, may be at greater risk in a rising rate environment. With CreditForecast.com you can demonstrate to regulators your ability to measure and manage risk.
Users can identify areas for expansion which fit their target customers’ economic and consumer credit profiles. This can be achieved by comparing trends and forecasts in existing locations to potential markets. Information broken down to the MSA and rest-of-state level provides users with great flexibility in analyzing different geographies.