A key question for lenders using credit scores is: How will future events impact a consumer’s credit score? An obvious concern is that the consumer was approved for credit given their score exceeded the lender cut-off at the time of evaluation, but may fall below the cut-off soon after the evaluation time. Lenders are also interested in the number of consumers who fail to obtain credit because their scores fall below a lender’s minimum, but then improve their credit scores to a level greater than the lender’s minimum either 3 or 12 months later.
This study analyzes consumer score migration. Two million consumers were randomly selected from the Experian Credit Bureau database. Their credit scores were determined every quarter during a two-year period between 2011 and 2013. Score changes were evaluated to determine the following insights: