ATLANTA--(BUSINESS WIRE)--The dynamic short-term loan industry continues to provide obstacles to its lenders. Specifically, one of the requirements in the CFPB’s rule proposal will mandate the reporting of certain kinds of small dollar loans to all “registered information systems," causing lenders a significant amount of effort. Additionally, lenders will need to check the information systems to determine whether a customer is eligible for a new loan and has the Ability to Repay.
To help mitigate this issue, FactorTrust is developing an innovative solution, launching this summer, that will simplify and streamline the reporting process from lenders to credit reporting agencies (CRAs). The solution will offer a single reporting format, enabling lenders to manage the credit reporting to the bureaus that the lender requests to ensure compliance with the CFPB rule.
"For 10 years, alternative lenders have been both leveraging FactorTrust and its leading underbanked credit risk data and scores to accurately predict risk, as well as reporting their credit performance of consumer loans in real-time. With a decade of high quality alternative credit data under our belts, we are uniquely positioned and most qualified to help lenders comply with regulations, and to help consumers get the credit they deserve. We understand lender and consumer challenges like no one else does. With that in mind, we’ve created a new, soon-to-be-announced product that will help lenders accelerate their compliance,” says Greg Rable, CEO of FactorTrust.
Additionally, Rable takes issue with the widely held notion that those in need of these types of loans are “stuck,” and, under the current system, cannot gain the credit needed to improve their future credit options. “Some industry experts have said that people who are in this category can’t ‘graduate’ to better credit scores and products the way the system is set up. These experts are simply ill-informed. Every time a consumer pays off a loan of any kind their opportunity grows. The problem is that the vast majority of these customers and their credit performance are simply untracked by the big three bureaus. This is when alternative credit data becomes essential to evaluating credit for consumers who deserve it,” says Rable. “Inclusion of alternative credit data is critical to both parties. We’ve seen people improve their credit scores – at every scoring level -- by having alternative credit data available in the underwriting process. More data is better for both the consumer and the lender.”
Near-prime borrowers will be affected by the rule proposal as much as subprime. Though there are various numbers floating around the industry, the fact is there are 113 million adults in the United States with a FICO score of 699 and below who will also be impacted by this issue. FactorTrust, The Alternative Credit Bureau, says due to the fact that “big three” bureaus are missing critical credit performance data on loans to the underbanked borrowers, this large number of consumers will be unfairly left out of accessing the funding they need and deserve if alternative credit data is not taken into consideration.
FactorTrust was the pioneer in collecting the most current alternative credit data available from its data contributors in real-time and making it easily accessible to all its lender customers. For more information on FactorTrust, please visit www.FactorTrust.com or contact FactorTrust at 1-866-910-8497.
FactorTrust, The Alternative Credit Bureau, helps lenders manage the credit lifecycle of underbanked consumers using unique alternative credit information not available from the Big Three bureaus, enabling them to offer non-prime consumers the credit they deserve. Nearly 113 million U.S. adults have non-prime scores. Leveraging the company’s credit information, lenders can more accurately predict future borrowing behavior, credit performance and risk scoring for this growing segment. Headquartered in Atlanta, the experienced FactorTrust team of predictive analytics specialists, statisticians and financial industry experts has delivered unique data and valuable insight to lenders throughout the U.S. for nearly 10 years. For more information on the quarterly FactorTrust Underbanked Index or the company itself, visit www.FactorTrust.com.