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S&P and Experian Collaborate to Create Consumer Credit Default Indices

In an effort to provide greater insight into the health of the U.S. economy, New York-based ""Standard & Poor's"":http://www.standardandpoors.com/home/en/us (S&P), a leading index provider, and ""Experian"":http://www.experian.com/, a global[IMAGE]

information services company headquartered in Costa Mesa, California, have teamed up to create a series of consumer credit default indices.

The S&P/Experian Consumer Credit Default Indices, to be launched on May 18, 2010, will seek to measure the balance-weighted proportion of consumer credit accounts that go into default for the first time each month, the companies said in a statement.

Four headline indices will be launched, including a mortgage default index, a second mortgage default index, an auto default index, and a bankcard default index. In addition, a balance-weighted composite index will measure default rates across all four of these loan types.


Granular indices by geography, at the metropolitan statistical area, state, census division, and census region levels, will also be available, as well as custom indices that can be created based on specific client requirements, S&P and Experian said.

The companies explained that these new indices are based on a broad cross-section of the entire U.S. consumer credit population, making them unlike other publicly-released metrics that recount previously defaulted loans or that measure delinquency rats only on securitized loans.

The indices will be calculated using data extracted from Experian's consumer credit database, which is populated with individual consumer loan and payment data submitted by lenders to Experian every month. This base of data contributors includes leading banks and mortgage companies and covers approximately $11 trillion in outstanding loans sourced from 11,500 lenders.

""Built from the monthly payment data generated by the lenders and aggregated by Experian, these indices will provide a timely, detailed look into the actual payment behavior of U.S. consumers,"" said David Blitzer, managing director and chairman of the index committee at S&P Indices. ""In addition, since the indices will allow us to get a pulse on the current default profile of consumers, they could also serve as a leading indicator on the direction of the U.S. economy.""

About Author: Brittany Dunn


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