TransUnion Account Management Scoring

TransUnion announced today the launch of its newly updated TransUnion Account Management and TransUnion New Account scoring models. Both models experienced improvements, over the previous versions, in their ability to identify bankrupt accounts -- in some cases by as much as 32 percent.

The Account Management Model is built specifically to help the financial industry manage existing credit accounts while enabling them to identify the most profitable current accountholders. The third version of this model, which also predicts the likelihood of an existing accountholder becoming 90 days or more delinquent in a 24-month period, revealed a 32.1 percent improvement in identifying bankrupt accounts in the lowest 5 percent of scores.

The third edition of the New Account Model, designed with advanced characteristic evaluation and scorecard segmentation for risk assessment of new prospects and applicants, differs from the Account Management Model by predicting the likelihood of a prospective applicant becoming 90 days or more delinquent in a 24-month period.

"It is integral to our business customers that our scoring models provide the necessary insight that is relevant in today's dynamic and challenging financial market," said Chet Wiermanski, group vice president, Analytic and Decision Services. "While results on portfolios may differ, our latest scoring models have proven to be quite valuable for the financial services industry. As the use and application of consumers' credit information evolves and expands to new, financial-related vertical markets, the improved performance in both models continues to reinforce that TransUnion risk solutions continue to meet and exceed the demands of today's market."

TransUnion conducted a Kolmogorov-Smirnov (K-S) test to determine the ability of the newest models to separate good accounts from bad accounts across the entire score range. Using the K-S test, the Account Management Model outperformed the previous model by 5.3 percent. Furthermore, the test found that the Account Management Model surpassed its predecessor in improving efficiency by 34.2 percent when identifying accounts 60 or more days delinquent in the lowest 5 percent of scores. "With credit delinquency rates either at or near their highest levels in recent history, it's vital for businesses to be aware of potentially poor producing accounts," said Wiermanski.

The validation of the Account Management Model utilized more than 7.9 million consumer credit files from leading companies in the auto, bankcard, banking, credit union, installment, mortgage, non-credit union, personal and other finance, retail and revolving industries. Data was taken from two sets of development performance periods to minimize effects of seasonality and to create an observation and performance period for testing purposes.