Driving Affordability – An Auto Industry Challenge
VEHICLE OWNERSHIP IS MORE than just access to reliable transportation. It provides the independence that enables individuals and families the opportunity to pursue job opportunities, receive essential services and enjoy greater financial stability and independence. Auto loans are an important financial tool for Americans, but vehicle affordability can be a challenge - with the average car payment for new vehicles at $766 monthly and average used car listing at close to $27,000.
To help promote positive economic change and open up more lending opportunities in the auto industry, Equifax has launched Insight Score for Auto, a new credit risk score specifically for automotive lenders – designed to help expand access to credit for consumers seeking to finance a vehicle. The score combines traditional credit data with other unique data insights available from Equifax, such as telecommunications, pay TV, and utilities attributes, that can be a key contributor to helping more American car shoppers move from unscorable or subprime into near prime or prime offers, which could help more consumers secure an auto loan.
“One of the biggest hurdles the auto industry faces continues to be vehicle affordability - especially with rising interest rates and higher retail sticker prices,” said Lena Bourgeois, Senior Vice President and General Manager of Automotive Services at Equifax U.S. Information Solutions. “The Equifax U.S. National Consumer Credit Trends Report highlighted record monthly payments in 2022, a phenomenon that increasingly makes it more challenging for new to credit, thin file or credit invisible consumers to maintain the credit quality needed in the market. Amid uncertain economic times, opening up greater access to credit benefits not only consumers but also auto lenders, dealers, and the industry overall. ”
Insight Score for Auto employs Equifax NeuroDecision® Technology, a patented modeling technique powered by artificial intelligence, which provides predictive and explainable insights designed to enable lenders to minimize risk in their portfolios by helping lenders understand how credit scoring decisions are determined, so they can stay compliant and make informed decisions when assessing credit risk. This technology is designed to allow lenders to expand lender prospect pools, and ultimately improve performance within a customized framework specifically for auto lenders.
While credit reports remain a strong indicator of credit history and past financial reliability, Fair Credit Reporting Act (FCRA) compliant information that is not included in traditional credit report data has the potential to help responsibly expand consumer access to credit opportunities and support a more inclusive economy. These insights can provide a more complete financial picture of auto loan applicants, particularly those with limited traditional credit history, which helps lenders expand the auto prospect scorable population up to 16% over traditional generic risk scores - and approve more people without increasing risk.
Equifax is focused on opening opportunities for people to access affordable, mainstream financial services in each of the 24 countries it does business. Through The Equifax Cloud™, unique data, fraud reduction tools, and powerful modeling techniques, Equifax develops global solutions that bring greater access to financial opportunities to more people in more places.
For more information on Insight Score for Auto, visit Equifax.com.