1. What is VedaScore Plus?
VedaScore Plus is our enhanced consumer enquiry where all the information on a credit file is collated together to produce a single score. This score measures the applicant’s potential credit risk at the point of application (vs. credit active population) and is also a ranking tool that credit providers can use to assess the applicants likelihood to make payments in the future.
2. How is the score calculated?
a. What is it made up of?
b. What does it include
c. What is the formula?
Amongst many characteristics; the score is based on components such as the number and types of inquiries, (residential stability) how many times you have moved addresses, and adverse information.
The formula is Veda’s Intellectual Property, however we are confident this is statistically sound. The scores are also tested and monitored regularly.
3. What does relative risk, applicant odds and population odds mean?
• Relative Risk (RR): is an odds based measure that compares a credit applicant’s odds with the population odds. It provides you with an estimate of how many times worse or better than average the applicant is compared to other applicants that are credit active. An RR of 2.5 means that the applicants odds are 2.5 times better than the population average (equal to 1), while an RR of -1.8 means that they are 1.8 times worse. RR has been capped at maximum +99.99 and minimum -99.99.
• Applicant Odds: This is another way of displaying the score of an individual. For example odds of 14:1 means that all the individuals with the same score as this particular applicant, on average 14 applicant’s exhibit good credit behaviour (i.e. no adverse event over the next 12 months) while 1 applicant exhibit bad credit behaviour (i.e. adverse event loaded on their file).
• Population Odds: This returns the total odds of the entire population a particular scorecard was built on. For example, if the population odds were 4:1 for a particular population, its means that out of every 5 applicants in the bureau sample, 4 exhibit good credit behaviour and 1 exhibits bad credit behaviour. This is relatively stable and will be monitoring quarterly to ensure no significant changes have occurred.
4. Why is the score from -354 to 1,186?
• It’s a sufficient range and is consistent with international standards. It also gives enough range to capture variations of scores without loosing predictive power.
5. Why have you added a score to my credit file?
• The current system of reviewing raw data often focuses on a ‘moment in time’. For example, if someone had a default on their credit file 4 years ago, this one event may concern a credit officer such that they refuse to extend credit. The benefit of a score is that it looks at all data on the credit file over the past 5 years and averages behaviour. This produces a much more consistent & predictive level of credit risk. This ensures decisions are made on the basis of statistical fact.
6. Does the score take into account income and assets?
• No. The NZ credit system works on what is known as ‘negative reporting’. This means that only credit default, previous inquiry information, public information such as bankruptcies, NAP’s and summary instalment orders and information about your demographic stability.
7. How can I improve my score?
• Pay all your accounts on time including court fines
• Ensure that no one else uses your identity to obtain credit
• Only apply for credit when you really need it
• Consolidate your debts
• Borrow from reputable lenders
• Try pay any unpaid defaults or if you are unable to, the next best thing is to contact your lender to try come to some kind of agreement or settlement which will change the unpaid status to a “settled”. Most lenders will be happy to do so.
8. The score you have given me is incorrect; I want to know the formula so I can check if it is correct?
• What we can do is give you your credit file so that you can check that all the information on it is accurate. If you feel that there is an entry which does not belong to you & that it is this that is affecting your credit score, let us know & we can work with you to understand & resolve the issue
9. How does the score work for 1st time credit applicants?
• The same as all others. It uses a scorecard that is designed for this group, & takes into account other information such as your personal address stability and the type of product you are applying for. Statistical analysis of this segment revealed that having no track record for managing credit products could slightly increase your risk. You will need to discuss this further with the credit provider and explain your situation.
10. Why are you making it harder for the younger generation to apply for credit?
• We are not. In fact the opposite. Segmentation and sub-segment analysis was conducted on various age groups revealing the VedaScores are extremely effective at assessing the credit risk of all key generations including the younger populations .
• The scorecard is much better at predicting those likely to display future adverse, which means more people (the vast majority) now fall in low risk categories and thus will find it easier to get loans. This also means those highly likely to not cope with the additional credit are more likely to be declined.
11. What is the benefit of having a score to me?
• It gives lenders a much more predictive view on your likely credit risk. This will mean that more people will have access to better quality credit, as a more holistic view of a person’s credit history is given.
12. I don’t want a score I just want a standard report?
• You need to know your credit score & actively manage your credit file. In this way you will get access to quality credit which often means a better interest rate. They also both come together, & supplying the report without a score makes no difference to your score.
13. Have you taken into account my inquiries where the credit provider has processed more than one for the same application?
• Yes, the scorecard takes multiple inquiries into account but this is only a part of many aspects used to generate the scores. Veda applies a deduplication process prior to scoring to remove obvious duplication.
14. I am a company director; what about my inquiries that relate to my companies would that affects my personal score? If so, why?
• It will have an impact, you will need to discuss this further with your credit provider and highlight to them you hold a number of directorships. Please be aware that you would have given authority for a personal inquiry to be done on you. If you believe that authority was not given, let us know and we can investigate on your behalf.
It makes my life alot easier...