ATLANTA--(BUSINESS WIRE)--FactorTrust®, The Alternative Credit Bureau™, released findings today from an industry-wide survey on the use of alternative data in the non-prime auto financing industry, which indicate that alternative data is being more commonly used for underwriting purposes in this market.
The survey, sponsored by FactorTrust in conjunction with Connections Insights, investigated participants’ goals, uses and sources associated with alternative data in their overall credit strategies.
Highlights of the findings include:
- 53 percent of respondents currently use alternative data in some capacity (“users”)
- 19 percent of respondents are in the process of implementing or testing alternative data and 28 percent are exploring the use of alternative data (“explorers”), but have not taken the step of integrating it into business processes yet
- Both users and explorers ranked mitigation of losses as the most common goal (88 and 100 percent, respectively) in using alternative data
- Of the current users, 82 percent use alternative data in underwriting, for scorecard development specifically; the explorers plan to use it equally as an overlay to alternative data scores on existing scores and applicant verification.
- Tradeline data is the most often used or desired alternative data type among more than half of all respondents
“These findings make it evident that the use of alternative data is now more mainstream than it is ‘alternative’ with non-prime auto financing companies,” said Connections Insights President Marguerite Watanabe, who performed the study.
“The results support our observations that all finance companies are either examining or integrating alternative data into their credit decisioning processes,” said FactorTrust CEO Greg Rable. “The more performance data these companies have on potential customers—specifically, alternative credit data they can’t get from the Big 3 bureaus—the more effective their lending practices become, making them more competitive.”
FactorTrust has long-provided alternative credit data, analytics and risk scoring information that lenders need to make informed decisions about consumers. It is differentiated from the Big 3 bureaus by its more than 250 million unique transactional data points untapped by these traditional sources.
The survey of non-prime auto financing sources was conducted by phone during March-April of 2017.
FactorTrust, The Alternative Credit Bureau, is relentlessly dedicated to proven analytics and clean credit information that provide lenders and financial service providers opportunities to grow more revenue, meet compliance regulations and serve more consumers with more credit options. At the core of FactorTrust is alternative credit data analytics and risk scoring solutions not available from the Big 3 bureaus. FactorTrust alternative credit data and analytics accurately predicts risk and the ability to repay near and non-prime consumer loans in real-time. The company’s solutions enable financial service companies an opportunity to uncover creditworthy prospects that are not surfacing via traditional credit sources. Headquartered in Atlanta, the experienced FactorTrust team has delivered unique data and valuable insight to U.S. lenders for more than 10 years. For more information on the quarterly FactorTrust Underbanked Index or the company itself, visit www.factortrust.com.