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By Cristian deRitis
Data is one of the biggest concerns institutions have when preparing for Current Expected Credit Losses (CECL). In fact, during a recent webinar we asked participants from various lending institutions to tell us about their greatest data challenge.
The data that is available to you -- and its granularity -- will dictate your method for forecasting losses. For example, you may use a:
Additionally, you must determine if you have sufficient historical data internally or will need to supplement from external sources. Institutions may benefit greatly from the use of external data sets either to augment their own history or to create industry-level forecasts. CreditForecast.com, a joint data solution from Moody’s Analytics and Equifax, was created specifically to meet these needs for consumer credit products.
In addition, institutions should ask themselves:
As you prepare for CECL, consider how you will overcome these challenges and continue to explore your options for implementation.
For information on how to prepare for CECL, call your Equifax account representative or fill out this contact form. Additionally, there are resources on the Equifax and Moody’s Analytics websites.
For more information on CECL requirements, take a look at my previous blog series where I cover: