New Credit Score Will Help Borrowers With Thin Files

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New Credit Score Will Help Borrowers With Thin Files

The new PowerView score from Equifax and LexisNexis will use additional information to create a more accurate credit score for borrowers applying for new and used car loans.

Accuracy of credit score

Some of the most difficult borrowers to judge are consumers with little or no information about when to credit history is pulled. Lenders describe these people with limited credit histories as having a “thin credit file”.

Consumers with a “light file” often cannot be assigned a credit rating due to a lack of information in their credit report, despite the fact that, based on other information, several of them might be eligible for a popular payday loans near me no credit check notes – more specifically, a car loan.

This is because most of the existing credit scoring tools, such as FICO, require a fairly extensive credit history in order to ensure accuracy. Consumers who cannot be rated – due to their age (too young) or other circumstances (cash buyers with no established credit history) – are referred to as “underserved” in the current credit system.

For many of these “short-file” borrowers, the latest news from LexisNexis Risk Solutions and Equifax Inc. may provide a solution to this problem.

PowerView Score

It’s called PowerView Score and, according to LexisNexis and Equifax, it’s “a new three-digit credit score specially designed for use in the automotive industry.” The new scoring system works by combining “alternative data sources, including telecommunications and utility payment history from Equifax and public record information from LexisNexis, to help auto lenders identify car buyers. solvent cars ”.

For consumers with little or no information in their credit reports, this new score could still help lenders determine if they qualify for a car loan. Plus, rather than requiring lenders to replace their existing scoring models, PowerView Score is designed to supplement the information they already have.

According to LexisNexis and Equifax, “Combining this data to construct the PowerView score has demonstrated a strong ability to be highly predictive and helps improve risk models that can be used to support credit analysis of premium applicants. subprime. ”

Good News for Thin File Borrowers

According to Ankush Tewari, Senior Director at LexisNexis, “New credit scoring offerings such as PowerView Score help secure traditional customers more precisely, while supporting the financial inclusion of millions of people who could not be rated using only traditional data. Preliminary analysis shows that using PowerView Score can not only result in a measurable increase in predictive accuracy for consumers with complete credit histories, but also effectively assess the creditworthiness of millions of consumers with little or no history. credit. ”

Here is what we think:

The new PowerView score will help lenders more accurately assess consumers with limited credit histories and irregular payments. This means that many borrowers who are currently turned down because of “limited credit” or “no credit” will have a better chance of getting a loan. car loan approval.

Speaking of odds, if you have credit issues we want you to know that Auto Express Credit can help you find a dealership for your best auto loan approval opportunity.

So, if you’re ready to build your credit, you can get started now by completing our online car loan application.