--- title: "Method & Data" url: https://lendriskanalytics.com/method.html publisher: LendRisk Analytics kind: Page description: "How LendRisk Analytics builds its method notes and write-ups: where the data comes from, how the synthetic worked examples are constructed, the math behind every metric, and what is illustrative versus market-sourced." html: https://lendriskanalytics.com/method.html --- # Method & Data [← Home](https://lendriskanalytics.com/) Method & data # What the numbers are, and what they are not. Every method note and write-up on this site is built to be defensible. This page documents where the data comes from, how the synthetic worked examples are constructed, the math behind each metric, and the clear line between what is illustrative and what is sourced from published industry data. 01 · The example data ## The sample books are synthetic. On purpose. The 2,000-loan example book, the direct-lender segment book, and the dealer scorecard portfolio are all **synthetic**. No real borrower, dealer, or lender data appears anywhere on this public site. The example loans are generated to mirror the structure of a real mid-market subprime book: realistic distributions of FICO, term, advance rate, vehicle age, mileage, affordability, and geography, with default and recovery behavior calibrated to the **level and shape of the published Fitch subprime auto ABS index** and ABS-EE-style loan-level distributions. Synthetic is the right choice here, not a limitation. It lets the write-ups demonstrate exactly how attribution and covenant math behave, without exposing anyone's portfolio. It also means the worked-example numbers are illustrative of **method**, never a claim about any specific lender's results. If a figure on this site is labeled **demo** or **blinded composite**, it came from a synthetic book and should never be read as a market statistic. Market statistics are cited separately, to a named source. 02 · The sample reports ## Sample reports use synthetic composite books. The two sample data reports walk one synthetic composite book through the full analysis. They are illustrative, built to show the format and the reasoning on made-up data, not drawn from any real portfolio. Every number in them is synthetic. The published articles and method notes apply the same reasoning to industry data and synthetic worked examples. 03 · The math ## Every metric, defined. - Net loss (charge-off − recovery) ÷ originated balance, per loan, aggregated by vintage, dealer, or segment. - EPD · early payment default First default within 3 months on book. A tell for underwriting quality, not seasoning. - LGD · loss given default Net loss ÷ defaulted balance. The severity side of loss, separate from frequency. - Default frequency Charge-off plus repossession over the cohort. - Vintage / static pool Loans grouped by origination quarter and aged at equal months-on-book, so newer paper is not flattered by being younger. - Roll / transition rate Share of a delinquency bucket that migrates to the next bucket month over month. - Covenant slope & runway Linear fit over the trailing 6 monthly readings, projected forward to the month each cap or trigger is crossed. - Segment flag A segment is surfaced only when it runs materially above the book average and carries a real share of total loss, so a tiny high-loss bucket cannot cry wolf. 04 · Benchmarks ## Where the market numbers come from. When a number is described as market data, it is cited to a named, public source. The write-ups carry their citations inline. The recurring benchmarks are: Fitch subprime auto ABS index S&P Global TransUnion Edmunds NY Fed NABD Manheim 05 · What the write-ups are, and are not ## Independent research, not a decision. The write-ups are **independent market research**: analysis built from public, named sources, walked through on synthetic worked examples. A worked underwriting example returns an **indicative** probability of default and expected loss to show how the framing works; it is not a credit approval, a score, or a guarantee. The state recovery-law breakdown is a **general reference** for understanding exposure, not legal advice; statutes change and edge cases exist, so verify with counsel before acting. Nothing here is an audit of any portfolio, an offer of credit, investment or legal advice, or a regulatory determination. It is research, published to be read and checked. 06 · Independence ## Published independently. LendRisk Analytics is an **independent research publication** with no position in, and no affiliation with, any company mentioned. Nothing here uses any proprietary data or systems. The work stands on the method and the sources, which are documented here so they can be checked. Have a question about the market, or a different view? [Send it through →](https://lendriskanalytics.com/contact.html).