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Trended Credit Data Reports

Valued Contributor

Trended Credit Data Reports

Hi All,

 

I have been reading articles on "Trended Credit Data" reports, which was originally designed for Mortgages but are now being used for other types of credit.

 

Do you all think this will expand and will this be a good thing, especially for rebuilders.

 

 

Message 1 of 11
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Moderator

Re: Trended Credit Data Reports


sjt wrote:

Hi All,

 

I have been reading articles on "Trended Credit Data" reports, which was originally designed for Mortgages but are now being used for other types of credit.

 

Do you all think this will expand and will this be a good thing, especially for rebuilders.

 

 


Doubtful without some sort of massive bureau push or regulatory mandate.  Lenders which used to provide trended data in some cases have stopped doing so.  First saw it back in 2011 or thereabouts with Experian, while it's expanded to other bureaus, I'm not sure it's really long for the world.

 

So far it remains to be seen what the benefits really are, as I understand it all of these (this, utilility / rental tradelines / etc.) are all designed for secondary qualification if you can't walk through the front door... and anyone who finds this forum who learns anything about building credit here, can walk through said front door.

 

For the rest of the consumers who don't find this place or similar on the net or elsewhere, not sure how much efficacy these things will have, limited number of consumers, and nobody is really going to be running to fix this I suspect any time soon.  I suspect it'll just quietly fade out, but I have a cynical streak this evening which is coloring this.

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Message 2 of 11
Valued Contributor

Re: Trended Credit Data Reports

Message 3 of 11
Established Contributor

Re: Trended Credit Data Reports

I'm honestly skeptical about the usefulness of alternate forms if data. Simply people just don't prioritize utilities and debt the same. How much does the average consumer even know or care about credit scores...the next season of Survivor now that's important. Maybe for mortgages the info can be useful, rent, utilities, ect, have a similar impact on life. For people with credit problems its a credit card that is the path to over spend, can't really overspend on rent.

I maybe wrong on this last part but it seems the first time I heard about this was the same time the housing market wasn't doing so well. It was a idea to try and get more people into homes. Especially the millennial generation which has been know to shy away from traditional forms of credit.

Banks number one priority is making money...leaves very little appreciation for social welfare. The only reason they would care about increasing the number of customers is if it resulted in an increased profit.
Message 4 of 11
Valued Contributor

Re: Trended Credit Data Reports

Good points, but at least its a way to build a credit score and Im sure utilizes and rent would be weighted differently.

 

However, the "Trended Data Reports" Im referring too is a deeper analization of one's credit report. For instance, reviewing and scoring based on a historical payment history, ie minimum payment vs a larger payment. etc.

 

 

Message 5 of 11
Community Leader
Senior Contributor

Re: Trended Credit Data Reports

Hi OpenG.  Just for clarity, our OP is asking about trended data which are different from alternative data.  That link that the OP gave us is a pretty good overview of what trended data are.  They are data which capture, for each month in the last 24 or 30 months, each reported balance, each payment you actually made, the date of each payment, what the minimum payment was supposed to be, and what your credit limit was, with the primary focus on credit cards.

 

That's a ton of information, multiplied by each month.  For most of the CRAs history, they collected basically your most recent reported balance (and most recent credit limit).  Full stop.  It was only for the most recent update -- all past updates got written over.  And the data about your payments were never collected (unless of course the CC issuer reported you making a late payment).

 

Trended data (assuming a CRA has a solid database of it across most CC issuers) give a creditor or a credit scoring algorithm the ability to detect whether you pay your bills in full each month, which is a powerful predictor of risk.  The big scoring models you are used to thinking of (e.g. FICO 8 and 9) had not incorporated trended data because the data didn't exist at all (for FICO 8) or they were just starting to come into existence (for FICO 9) when those models were being developed.

 

Alternative data are things like apartment rental history, payment history on utilities, etc.  Thus that article that the OP links to distinguishes between trended data on the one hand and "alternative data sources such as checking/debit account information, property and tax records, rent and utility payments and payday loan information to make it easier for lenders to evaluate people who don't have a credit history."

 

An interesting question (raised by Revelate) is whether CC issuers who might have initially been supplying trended data  in the last few years might now be backing away from it.  (Again, trended data are the rich data on each month of a standard credit account, like a credit card.)  I think Thomas Thumb may have also raised that question recently

 

I haven't pulled my true full credit reports at annualCreditReport.com in a long time... maybe three years?  So I wouldn't know.  But that would be easy for me to do.  I will have to do that next month and see how many of my cards are reporting the TD.

Message 6 of 11
Established Contributor

Re: Trended Credit Data Reports

I read a similar article that was focused more on using alternative data as a replacement for traditional forms. Seems the above article is focused on combining traditional data with historical and alternative forms to create a better prediction, I should have read through it better. Definitely interesting, it stands to reason that the more info available the more accurate the prediction.
I would think that a very large data sample would be needed to make any kind of valuable comparison. After all it's not just individual consumer trends that are important but also social and economic trends.
Either way it sounds very invasive...consumers don't like invasive. No matter how well it works it's going to be hard for some to except.
Message 7 of 11
Community Leader
Senior Contributor

Re: Trended Credit Data Reports

Thoughtful reply, OpenG!

 

Alternative data are about the whole "scoring people who were previously unscorable" thing.  I.e. folks who have never had a credit card or a loan, or who haven't had any CC or loan report in the last six months.  That could be people with peculiar principled objections to credit (Dave Ramsey types, folks belonging to certain religions -- wait, that's the same thing), millenials who got scared by the meltdown and have never had a CC, spouses who have raised kids but never had their own income or CC, and especially poor folks.

 

Trended data are totally different.  In fact, trended data only apply TO people who have traditional credit (e.g. credit cards).  So by definition, if you have trended data on your report, you were already fully scorable by the old models.  Its just that trended data permit creditors to get a much better gauge as to your riskiness (that's the question of whether you pay your cards in full each month -- of interest to all creditors) and also your profitability (this applies to CC issuers and not a lender considering you for an installment loan).  Before TD, there was no way for a CC issuer to gauge whether you were likely to make him a lot of money in either swipe fees or interest.  You might be the sort who applied for a card and then almost never used it -- which involves negative profit.  With TD they can assess this much better.

 

That assumes of course that the CRA has a database rich in TD on most credit cards.  Any kind of analysis (whether TD or any other sort) is only as good as the data that are being provided.  That's why I will be interested to see whether most or all of my 12 credit cards supply the TD strecthing back over the last 24 months.  I have cards with Amex, my CU, Citi, BOA, Chase, and Wells Fargo (and within that a number of Mastercards, Visa, and Amex logos).  I have no store cards or charge cards.

Message 8 of 11
Community Leader
Senior Contributor

Re: Trended Credit Data Reports

PS.  I am not sure I find either the use of alternative data or TD especially invasive.  Remember, the only people for whom alternative data are being used are people who (a) really want credit and (b) have no credit score using traditional methods.   So these people tend to be really happy about the prospect about models or approaches that would consider their utility payments or rental payments.

 

And with TD, it's not like the credit bureaus are being told what kinds of purchases you make.  If somebody uses his CC to buy porn, that really would be invasive if that fact was in the CRA database.  In a way, a lot of what TD are is just the same data they were getting before, but this time the CRA is not overwriting it each month.  The exception is the record of your payments.  That is new.  It's the payment data that enable a TD analysis to see if you are paying your bills in full.

Message 9 of 11
Established Contributor

Re: Trended Credit Data Reports


CreditGuyInDixie wrote:

PS.  I am not sure I find either the use of alternative data or TD especially invasive.  Remember, the only people for whom alternative data are being used are people who (a) really want credit and (b) have no credit score using traditional methods.   So these people tend to be really happy about the prospect about models or approaches that would consider their utility payments or rental payments.

 

And with TD, it's not like the credit bureaus are being told what kinds of purchases you make.  If somebody uses his CC to buy porn, that really would be invasive if that fact was in the CRA database.  In a way, a lot of what TD are is just the same data they were getting before, but this time the CRA is not overwriting it each month.  The exception is the record of your payments.  That is new.  It's the payment data that enable a TD analysis to see if you are paying your bills in full.


Would it also mean to be careful each month to keep utilization 1-9%. Keeping AZEO every month for the purpose of buiding good trend will be hard with multiple BBR cards.


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