Consumers impacted by the coronavirus have a lot to worry about — paying bills, possibly finding a new job and, of course, staying healthy. But chief among those concerns for many is the potential long-term impacts that pandemic conditions may be having on their credit — and whether the process of determining that score is fair.
A recent study by Finicity, a personal finance and software company headquartered in Salt Lake City, shows many consumers are questioning the credibility of the credit scoring process as a whole.
In a survey conducted in June of nearly 2,000 consumers, 82 percent of respondents said the current credit review process should make it easier for responsible borrowers to demonstrate creditworthiness.
Andy Sheehan, president and COO at Finicity, said most automotive lending decisions aren’t incorporating alternative data, such as consumer banking data or utility payments. Perhaps it should, borrowers argue.
“Auto shoppers believe the picture is incomplete here today, and they’re right,” Sheehan said. “People are wondering why their savings may not be factored into a credit score.”
A separate, recent study by the Consumer Financial Protection Bureau found consumers have not experienced significant increases in delinquency or other negative credit outcomes as reported in credit record data following the COVID-19 pandemic.
There are many uncertainties coming out of the COVID-19 environment, and lenders are particularly wary of approving auto loans for customers with less-than-perfect credit.
But consumers worried about their credit score impacting their ability to obtain an auto loan have several options. Credit bureaus TransUnion and Experian both offer alternative data tools that “boost” credit scores by factoring in personal data. And Finicity produces a tool that allows lenders to examine customer checking account data to validate proof of income at time of purchase.