Why Lenders Should Use Big Data in Decisioning Process

Credit scores have always been an important criterion in a lender’s decisioning process. However, this trend may alter as non-traditional data has increasingly attracted attention in the auto lending industry.

Lenders who exclusively use traditional credit bureau scores are “missing a wealth of information that could have a huge impact on underwriting or lending decisions,” according to a Credit Bureau Connection (CBC) press release. The credit report financial servicing company announced yesterday that it will partner with another technology company to offer lenders non-traditional data that will help lenders “more accurately price and structure deals” with profitable terms while managing default risk.

In fact, many lenders no longer solely rely on credit scores for decisioning. “We don’t have a ‘minimum Fico score,’” Brent Sergot, World Omni Financial Corp.’s group vice president, previously told Auto Finance News. “We review the loan application holistically because we realized Fico score is just a small part of the application process.”

“Big data is popular in auto finance, with more statistics and digital information available than ever before,” Jeremiah Wheeler, vice president of financial services at DRNData, told AFN. Fico score reports cannot completely speak for a customer’s credit performance, and auto lenders should really “think outside of the box” to make the most out of non-traditional data — not only in the origination process but also in the collection process, he added.

For more content like this, check out the 17th annual Auto Finance Summit, which will take place on Oct. 25-27 at the Wynn Las Vegas. To learn more about this year’s event — or to register — visit the Summit’s homepage here.


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