Equifax calms sub-prime lending worries

Equifax has provided analysis which challenges the concerns voiced in some around the stability of the sub-prime auto lending market.

In response to mixed reports and conflicting analysis in the marketplace, Equifax conducted research examining auto lending dynamics and the resulting performance differences. Findings point to continued strength within sub-prime auto lending in what has increasingly become a segmented sector within which different lender types specialize in narrow credit bands.

The research also found that most lenders remain very conservative relative to their pre-recession lending habits, while some are meeting the needs of consumers with lower credit scores.

“The fact is loan performance is good relative to historical levels and the slight weakening we are seeing cannot be attributed to a change in how lenders are underwriting their loans or call into question the stability of the subprime market as a whole,” said Amy Crews Cutts, senior vice president and chief economist for Equifax. “Consumer data tells us that market share is shifting across different lender types and specialty lenders are lending in higher-risk segments that are not otherwise being served.”

Verification interface

Separately, Equifax has built an interface between its Work Number database of income and employment information and financial services technology solution provider Fiserv’s automotive loan origination system. Together, the solutions provide faster and more robust income and employment verifications to customers. Refreshed each pay period, The Work Number is the largest database of income and employment information provided directly from employers and includes records from more than 75% of the Fortune 500 companies, including an increasing number of medium-to small-sized employers.

Fiserv is one of the industry’s top providers of auto loan origination and servicing systems, completing upwards of five million originations on 18 million credit applications on its automotive loan origination system last year. The connection to the Equifax database can allow lenders to secure income and employment data in seconds and help approve loans quicker and limit stipulations.

“Fiserv has chosen our income and employment verification solution because it provides instant access to data that can help its customers close deals faster,” said Scott Collins, senior vice president verification services at Equifax workforce solutions. “These clients are already using our traditional credit and commercial data and this enhancement will provide a deeper view of a consumer’s credit profile and provide a tremendous value to their overall underwriting process.”

Charles Sutherland, vice president, product management and strategy, lending solutions at Fiserv, said of the integration, “After surveying the market for a proven partner, it became evident that the Work Number met all of our success criteria. Together, these two applications aim to improve the speed and accuracy of consumer originations.”