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PayNet Launches the Highly-Predictive PayNet MasterScoreSM
PayNet announces the release of the PayNet MasterScore, the most predictive pooled-data credit score ever developed for commercial equipment financing, and applicable for the full range of borrower industries and equipment types being financed today.
The score was developed by a group of credit professionals and mathematicians using PayNet’s data pool of over 12 million equipment loans and leases totaling over $550 Billion, combining traditional credit expertise with cutting-edge modeling of the complex drivers that most impact the payback performance of term loans and leases. And unlike many other models, the MasterScore was built using data from both recent years and from the last recession, to help it better predict outcomes in both good times and bad.
According to the company, the development process for the PayNet MasterScore considered several hundred potential variables, ultimately resulting in the selection of 57 unique variables meeting the dual criterion of producing superior predictive power, while paralleling the practices and principles of traditional credit underwriting. The model includes specialized scorecards for major industry segments, such as Transportation, Construction, Agriculture, Healthcare and Retailer segments.
While most other commercial credit scores focus almost exclusive on an applicant’s delinquency history, the MasterScore was developed using such an extraordinarily large sample of prior transactions that it was possible to take advantage of a wide variety of attributes and subtle clues that are in fact very predictive of future performance. Besides delinquency and changes in patterns of delinquency, the model considers the applicant’s time in business, life cycle stage, business size, industry, borrowing experience, financing practices, paydown, historic regional risk, and local economic conditions, among many other factors.
"The PayNet MasterScore is actually a new and substantially improved version of the PayNet Rating, originally rolled-out in 2002. And because the PayNet MasterScore, like the original PayNet Rating, was built using comparable term-debt data, it is not surprising that this model’s performance statistics far outperform those of scores based primarily on trade credit data," says Bill Phelan, president and co-founder of PayNet.
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Founded in 1999, PayNet, Inc. is the industry’s
largest repository of historical lease and loan payment information on the
U.S.
small-business community. PayNet’s information is utilized on behalf of participating institutions to increase revenues, control risk and lower operating costs.
Its data covers more than $400 billion in loans on privately-held small businesses.
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