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The next Euroconstruct conference will take place in Munich on 11/12 December hosted by the IFO Institute of Economic Research. For more details and to register, please click the link below:
There is ample evidence that economic conditions influence debt behaviour. Conventional approaches to incorporating economics into credit analysis tend to focus on a narrow range of aggregated macroeconomic variables – which measure the state of the economy as a whole.
These measures can, however, at best serve only as rough approximations for the conditions facing individual borrowers – since economic conditions vary widely by geographical area, industry, household characteristics and many other attributes.
Experian’s approach to incorporating economics into credit analysis acknowledges and exploits the variation in economic conditions facing different groups of borrowers (identified on the basis of residential location and household type), so greatly expanding the information available.
This approach allows for the possibility that different borrowers face different economics, as well as the possibility that different borrowers may react differently to the same economic changes.
A set of new bureau scores (Future Delphi) are now available based on the existing Delphi scores, which incorporate household economic data at national, regional and local level. These new scores are able to track the changes in bad rate over time, which make our scores more resilient to economic change – future proof.