Gain Competitive Insight with Credit Benchmarking Tools

If you're a VP of sales or marketing, or you head up the risk group in your auto lending organization, you're faced with the constant need to evaluate and adjust your auto lending criteria. Fail to keep up and you could fall victim to the fierce competition seeking to dominate your area. Fortunately, there are some powerful new tools that can help keep you a step ahead of the competition.

Customizable benchmarking tools

Benchmarking tools like Credit Trends allow auto lenders and subprime lenders to see where they stand. "A subscription to Credit Trends breaks down U.S. auto lending data by loan and lease, by client-specified peer groups, by geography — be it zip code, MSA or state — or even by total number of loans, total balances and delinquency rates," explains Richard Heath, Senior Consultant at Equifax Analytical Services. Tools like these break help to down critical data for auto loans by risk score range for origination as well as existing accounts. Subprime lenders, for example, may want to take any FICO ® score less than 600 and break them out with more granularity so that they can see what's going on in the 500 and 550 ranges. "Any number of peer groups, such as internal, primary competitive, captive, non-prime and others, can also be 'broken out,'" notes Heath.

A rear view of critical data points

Clients can even get data points going back nearly a decade, allowing delinquency groups to be back-charted on a monthly or quarterly basis. This can give lenders a "rear view" of auto loans prior to the recent recession. Similar to SAS summaries, these reports break out lending data into a number of categories. For example, the system could sum up Nevada loans originating in 2008 with risk scores of 700+ using loan amounts, balances and 90-day, 60-day or 30-day delinquent loans — all of which can then be used to create charts and comparisons between a lender and their peers.

A leg up on the competition

Using powerful benchmarking tools like Credit Trends can greatly simplify the creation of charts and graphs that senior management needs to show where they stand in terms of their competition. Lenders can get a sense of which of their groups are getting more business — by region, state, MSA or zip code. Lenders can allocate sales and marketing resources to areas where market share is either declining or nonexistent due to competitive peer efforts. Using subscriptions like Credit Trends can also be highly cost effective in many cases. For example, if clients need to "rear view" 72 months of archival data, they receive 72 files — one for each month. They won't have to pay 72 times the archival fee of conventional look-back tools. The system is already set up.

A wealth of key aggregation attributes

Today's new breed of versatile benchmarking tools can provide lenders with a cornucopia of aggregation attributes to analyze auto loans. Credit Trends includes origination vintage (the quarter the loan was opened), origination risk score (the risk score range assigned to the loan when it was opened), current risk score (when the final loan was cut), loan product (auto, credit card, mortgage, student loan, etc.), geography (by MSA, zip code, etc.) and client-specified peer group. A soon-to-be-added attribute can help clients better evaluate loan performance by terms, allowing them to break out loan balances by different term ranges. These aggregation tools provide another way for lenders to evaluate their market, especially in today's hyper-competitive arena.

To learn more about Equifax solutions for Automotive, please visit our website.

 

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