TransUnion has developed a risk assessment model to help auto lenders evaluate the potential for future loan delinquency based on the history of the vehicle used as collateral.
The TransUnion Vehicle History Score was developed with Carfax and uses vehicle-specific information to help lenders improve risk management. It is designed to predict the credit risk of an auto loan using information collected by Carfax over the operating life of the auto. Using only the Vehicle Identification Number (VIN), Carfax transmits vehicle history data to TransUnion which forms the basis of the score.
It returns a value of 100 to 999, corresponding to a rank-ordering of the likelihood for default on a loan using the vehicle as collateral.
"The strategic partnership between TransUnion and Carfax gives lenders a new, unique view into the default risk of an auto loan," said Jason Laky, vice president of product strategy in TransUnion's financial services business unit. Because it combines Carfax's vehicle-specific data with TransUnion's risk-modeling experience, the score "represents a step-change improvement over traditional asset risk assessment in auto finance, such as wholesale book value."
Because it does not use consumer information, the score gives an alternative view of risk not readily available to auto lenders, according to TransUnion. The score can also be refreshed after origination for a periodic collateral quality assessment and to support remarketing decisions.