Traditional credit data is a valuable asset to give a snapshot of a borrowers’ historical payment performance and behaviors. However, despite its proven importance, it only tells part of the story. Consumers are not one-dimensional, and neither are their credit profiles. As such, auto applicants should not be viewed only through traditional credit data, but also alternative data. The use of alternative credit-data sources such as phone and cable TV payment histories are gaining greater acceptance among automotive lenders in deciding whether to finance a vehicle purchase. This is because these data sources add tremendous value, especially if you are moving from the prime to nonprime segments.
Takeaways: - How the use of alternative data in conjunction with traditional credit data has helped more accurately assess risk on buyers with varied profiles, including prime and deep subprime, to help reduce write offs and improve efficiencies
