TransUnion (TRU) Introduces New Predictive Risk Scoring Model
TransUnion TRU shares have gained 57.5% in the past year, outperforming the industry’s rise of 26.5%.
The company recently introduced CreditVision Link Short-Term Risk Score, a predictive risk scoring model.
The model integrates traditional static and trended credit data as well as alternative credit data to enable lenders to identify consumers with a good track record across the markets. This will improve lender’s predictive power and decision-making abilities.
Liz Pagel, vice president of consumer lending market strategy, stated, “alternative credit data alone does not provide a comprehensive view of subprime consumers or tell their whole story, but when combined with traditional, particularly trended data, it can yield powerful results.”
Putting FactorTrust to Good Use
The move reflects TransUnion’s efforts to leverage on FactorTrust, the alternative credit data provider that was acquired in 2017. The Short-Term Risk Score is built on alternative loan performance outcomes exclusively sourced from FactorTrust’s alternative credit data base. This data base includes FCRA-compliant, proprietary information on alternative loans, which is not reflected in the traditional credit file.
TransUnion Revenue (TTM)
TransUnion Revenue (TTM) | TransUnion Quote
Wrapping Up
The model enables lenders to have in-depth understanding of loan applicants and their payment behaviors through segmentation and evaluation of consumer risk profiles. We believe that its roll-out is a part of TransUnion’s bid to strengthen position as a provider of consumer reporting models that capture a wide range of positive payment behaviors.
Zacks Rank & Key Picks
TransUnion carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Business Services Sector are WEX Inc. WEX, Genpact Limited G and Total System Services, Inc. TSS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for WEX, Genpact and Total System is 15%, 10% and 14.6%, respectively.
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