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Experian TAPSSM - How It Works
Algorithm Development - Annual Consumer Spending
Experian TAPSSM is the first commercially available algorithm that uses credit data to calculate annual consumer spending.
- Algorithm calculates the last 12 months of total card spend
- Validated on the accounts of multiple card issuers and network trade lines
- TAPS is complementary to Vantage Score, credit line strategies and utilization and thus can rank within sub-segments.
- Does it work? Predicted Consumer Spend vs. Actual Consumer Spend
- An independent validation sample was scored and compared with actual consumer spend over 10 vintages of 12 months: R2= .78
- A similar validation on a different issuer was also conducted: R2= .87
- R2or “Coefficient of Determination” is a measure of the proportion of variability that two variables share, or in other words how much one can be explained by the other.
- The Coefficient of Determination above of .87 means that approximately 87% of the variability of each variable is shared with the other.
- Accurately captures annual consumer spend
The TAPS algorithm discriminates consumer spend, accurately and independent of balances, with R2of 0.75-0.85
- Complements income models
TAPS varies significantly within Income Insight bins
- Will allow targeting across multiple risk bands
VantageScore is not correlated with consumer spend. TAPS is a necessary complement to a risk score.
- Use with bank products
Deposit balances are significantly correlated with TAPS.
HELOC balances are also correlated with TAPS.
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