How Auto Lenders Can Improve Credit Opportunities

Alternative data includes factors such as privileges, business ownership and attendance at a two- or four-year college, according to Semere.

Equifax on December 20 reported success with another type of alternative data that he planned to generalize. The credit bureau plans to integrate “Buy Now, Pay Later” results into credit reports for review, calling itself the first agency to standardize this process. The term refers to the purchase of goods on interest-free installment plans.

The BNPL data gave customers with “thin” (two entries or less) or “young” (two or less years of credit history) credit records a gain of 21 points in FICO. It also helped consumers with previous late payments improve their scores by 13 points.

King called two categories of alternative data particularly relevant to auto loans. The first involved credit-seeking behavior not visible to credit bureaus, such as online and subprime loan applications and checking accounts.

The other was for what he called “credit life event data,” which he said was “really impactful in the automotive space.” That included professional licenses and a stable rental history, King said.

Some consumers are familiar with the traditional story of building credit that begins with a first bank account during childhood, CU 2.0 founder Kirk Drake said during the Scienaptic webinar.

“That traditional route doesn’t necessarily exist for a large portion of our population,” said Drake, who previously observed that a percentage of consumers saw no difference between a bank account and a prepaid debit card.

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