|
Job Security Score Promises to Lower Credit and Mortgage Losses
By Alton Gary Simpson
WILMINGTON, DE - Scorelogix, a consumer income and payment risk analysis firm, is introducing its patent-pending Job Security Score in the hopes of providing new consumer credit risk insights by predicting individuals' job-loss and income-loss risk. Since financial institutions incur credit losses partly because of their inability to predict borrowers' unemployment risk, JSS promises to reduce those losses, by predicting borrowers' unemployment risk and their 'ability-to-pay' risk, which has been a component of consumer credit risk that standard credit bureau scores have missed.
JSS is similar to a credit bureau score but unlike the credit score, which predicts 'willingness-to-pay' based on credit history, JSS predicts the 'ability-to-pay' based on future income risk. It predicts this 'ability-to-pay' risk by finding patterns and relationships between the economy, business conditions, and individual demographic and employment indicators to predict an individual's unemployment risk.
According to a press release from Scorelogix, since job loss is a key driver of consumer bankruptcies and delinquencies, JSS has significant applications as a predictor of consumer credit risk, both as a supplementary credit score and as a primary credit score when conventional credit scores are unavailable or unreliable. It also allows lenders to have a more accurate consumer risk assessment model in place. When combined with credit bureau scores, JSS improves predictive power by redistributing the population in a way that allows lenders to further identify good and bad accounts, increase approvals without increasing the risk of losses and identifies a larger number of delinquent accounts earlier.
A differentiating factor of JSS is that it is a leading indicator of credit risk, as opposed to credit bureau scores, which are lagging indicators. It offers new credit risk separation opportunities leading to superior acquisition, pricing, and delinquency and loss management capabilities. Testing by Scorelogix has demonstrated that JSS predicts unemployment risk up to 12 months in advance with more than 85% accuracy.
JSS is Equal Credit Opportunity Act compliant, does not require consumer's Social Security number or any personally identifiable data, is available for the entire 215 million adult U.S. population, and is updated monthly, to reflect the latest economic conditions that impact employment and income.
More subprime news
| 
