Historical Loss Rate Method
This method uses historical loss information to arrive at historical loss rates. The current period loss rate is estimated by taking a weighted average of rolling period historical loss rates. Adjustments for current conditions are done using Q&E Factors.
This method uses historical account data in order to track the migration of loans to charge-off. The weighted average of multiple rolling period loss rates is used as an estimate of the current period loss rate. Adjustments for current conditions are done using Q&E Factors.