Moody's Economy.com provides industry-leading retail portfolio analytics and stress-testing solutions to financial institutions and companies worldwide. We are chosen by clients because of the uniqueness of our services-as the only major provider able to adequately account for both non-economic and economic factors in explaining changes in credit quality.

Our approach is unique because vintage credit quality is modelled as a function of macroeconomic as well as industry drivers. We think it is vital to recognise that vintage quality, in terms of likely future average probability of default, depends on the performance of the broader economy. Lenders have historically used credit scoring models based only on customers' past credit history. Since economic conditions change quickly and are often different than those that prevailed historically, credit decisions based on credit scores developed using historical information do not fully account for all the information available to lenders.

Our approach provides lenders with a method to incorporate forward-looking economic information into credit decisions and offers actionable insights by:

• Explaining variation due to vintage, maturity, macroeconomic conditions, demographic, non-economic factors, and others.
• Forecasting performance of existing and future vintages.
• Producing alternative scenarios to allow for "what if" analysis.
• Improving credit scoring at origination by more accurately accounting for the business cycle's influence.

Our approach can be used to:

Improve the accuracy of P&L forecasting. Most P&L forecasting is done by lenders at a portfolio level and does not take into account the changing economic environment. These models are often based on historical roll rates that remain constant regardless of economic conditions. Roll rates are highly dependent, however, on the health of the job market and broader economy. Our method helps to optimise portfolio exposure by understanding correlation across product lines. This helps to create P&L models in which roll rates are a function of economic and credit variables available from CreditForecast.co.uk, which thus result in more accurate forecasting.

Improve the predictive ability of lenders' current customer-level scoring. Similarly to approaches to P&L forecasting, lenders have historically used credit scoring models based only on customers' past credit history. Since economic conditions change quickly and are oftentimes different than those that prevailed historically, credit decisions based on credit scores developed using historical information do not fully account for all the information available to lenders. CreditForecast.co.uk provides lenders with a method to incorporate forward-looking economic information into credit decisions.

Benchmark lenders portfolios' performance against that of the entire credit market. Benchmarking can be done across product lines for both growth in credit (volume or quantity) and credit risk (quality). This offers an independent and transparent perspective for internal and external constituents. By benchmarking against the entire market, lenders will be able to identify risks and opportunities.

Evaluate the sensitivity of lenders' portfolios to shifting economic conditions. CreditForecast.co.uk helps to answer questions like: Just how important are falling unemployment or rising interest rates to loan growth and credit quality? Do they vary significantly across product lines? How correlated are the product lines you have exposure to? In this way, lenders can determine whether and by how much, for example, a slow-growing or stagnant economy will have a negative impact on the credit quality of their mortgage versus credit card portfolios.

Demonstrate to regulators their ability to measure and manage risk, for example, Basel II reporting credit quality, exposure, loan losses, reserves and capital requirements. CreditForecast.co.uk enables quantification of risk exposure by product line for both internal and external constituents.

Equifax is a global leader in information solutions, leveraging one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customised insights that enrich both the performance of businesses and the lives of consumers. Customers have trusted us for over 100 years to deliver innovative solutions with the highest integrity and reliability. Businesses-large and small-rely on us for consumer and business credit intelligence, portfolio management, fraud detection, decisioning technology, marketing tools, and much more.

Moody's Economy.com is a leading independent provider of economic analysis, data, and forecasting and credit risk services. We forecast 45 countries, providing detailed analysis, data and alternative forecast scenarios. Our vintage-based approach effectively captures changes in performance by breaking portfolio performance down to each vintage's unique attributes and those factors that are acting on them. In contrast to how retail credit loss analytics have previously been done, our model explicitly ties the fundamental drivers of performance to the business cycle. This allows for a truer reflection of the drivers and overall performance. Importantly, it also allows for Economic Stress Testing and Scenario Analysis.