3. 3
AGENDA
– State of the Operator’s Consumer & Credit Data
– Key Components of Good Underwriting
– The value and types of alternative credit data
– Utilizing Credit Information
– Questions we can answer
4. 4
THE STATE OF CONSUMER CREDIT
M A R K E T O P P O R T U N I T Y T O S TAY C O M P E T I T I V E
Underserved
by Big 3
300-499
6%
500-549
8%
550-599
10%
600-649
10%
650-699
13%
700-749
16%
750-799
18%
800-850
19%
“Big 3” ~$8.5B in 2014 Revenue – Serving the “Prime/Banked”
Credit and Consumer Data Services Market
For Underbanked / Non-prime Largely Untapped
Massive Underserved Market Population
113M
of US adults,
have a FICO score
under 700
FICO Score Distribution of US Population (240M)
With ~$8.5B in combined revenue, the Big 3 credit reporting agencies (“CRAs”) are
focused on covering prime US consumers, leaving a significant market opportunity in the
underbanked population that is non-prime.
From CFPB (*May 2015) – 26 million U.S. adults have no credit history with the
Big 3 bureaus, and further 19 million U.S. adults credit data is so limited or out of date with the
Big 3 bureaus, that they are unscoreable. In total, 45 million U.S. adults are living without credit
scores.
47% OF U.S. ADULTS HAVE BELOW-AVERAGE CREDIT SCORES
5. 5
• Three Sides to Every Deal
– Capacity
• Highly debated metric
• Can the buyer afford the unit?
• 46% of Americans can not cover a $400 emergency – Federal
Reserve
– Collateral
• Insuring the valuation is fair to both buyer and lender - CFPB
– Credit Data
• Traditional
• Alternative
K E Y C O M P O N E N T S O F G O O D U N D E R W R I T I N G
GOOD UNDERWRITING = KEEPING THEM SOLD
6. 6
• Credit Data - Not Every Operator Uses Credit Information
– “Everyone of my customers has bad credit”
– “Regulatory requirements are steep & expensive”
– “I don’t want to lose my customer to the automotive finance companies”
K E Y C O M P O N E N T S O F G O O D U N D E R W R I T I N G
GOOD UNDERWRITING = KEEPING THEM SOLD
7. 7
SHOULD YOU USE CREDIT INFORMATION?
Know the endgame and the more likely
your objective will be met.
Considerations:
• qualify more consumers
• reduce credit losses
• improve conversion rates
• risk adjust pricing
GOOD UNDERWRITING = KEEPING THEM SOLD
8. V a l u e & T y p e s o f
A L T E R N A T I V E D A T A
9. 9
• Everything that is non-Big 3 bureau based has been
considered alternative…not true
• Runs the entire data spectrum
• Proprietary Data to widely available data
• Non-prime trade lines to public record data
• FCRA (decision-able) to non-FCRA (not decision-able)
• Real time reported data to monthly reported data
• Alternative Bureau to Big 3 Bureau
• What’s really important? Predictive lift and business benefit
ALTERNATIVE DATA SPECTRUM
12. 12
• Credit data can provide you with identity intelligence and verification insights
that allow you to make sure the borrower’s:
– Input data is current and accurate
– SSN was issued and belongs to the name of the borrower
– Name verifications, e.g. marriage licenses
– Physical addresses and date verification
– Birth date verification
UTILIZING CREDIT INFORMATION
V E R I F Y O R VA L I D AT E A N A P P L I C A N T ’ S I D E N T I T Y
13. 13
• 25% of the
underbanked applied
with a different mobile
number within one year
• 34% changed
employers within one
year
• 36% moved within one
year
• The more of each…the
higher the risk
UNDERBANKED INDEX
I N S I G H T S I N T O T H E S TA B I L I T Y O F U N D E R B A N K E D C O N S U M E R S
14. 14
Impac t of Alter native D ata on Tr aditional C r edit D ata
Traditional bureau overlaid
FactorTrust data on their
bureau database:
• For ‘Unscoreable’ files,
adding short-term loan
data would increase the
bureau score into the 600
range, and
• Adding a delinquent short-
term loan would increase
the bureau score into the
500 range
36.5%
45.7%
19.0%
14.9%
29.8%
25.0%
37.2%
63.4%
4.0%
0.5%
0.5%
0.7%
9.7%
5.7%
0.0%
50.3%
80.4%
84.6%
69.5%
65.3%
57.0%
0% 20% 40% 60% 80% 100%
< 500
500 - 600
600 - 700
700 - 800
800 - 900
> 900
Total
2009 - 2011 Generic Bureau Score Shift Distribution
Score Decrease No Change Total Score Increase
Short-term Borrowers
2009 - 2011 Credit Score Shift Distribution
15. 15
Questions? We have answers!
• Questions:
– Overview of the dilemma operators face using traditional credit bureau
data and trying to underwrite people with known traditional bureau dings
(low score/no score)
– What does alternative data mean? How does it impact an operator? How
you can improve credit defaults?
– Application data vs credit vs collateral.
– How to protect customers from losing them to dealers using larger sub-
prime finance companies
COME SEE FACTORTRUST @ BOOTH #110
17. 17
COMPANY OVERVIEW
FactorTrust, The Alternative Credit Bureau, helps lenders
give underbanked consumers the credit they deserve by
providing the most unique source of alternative credit
information not available from the Big 3 bureaus
Operates in the US and UK, with a growing proprietary
global database of 200 million transaction records on 17
million unique consumers, representing one of the largest
databases in the underbanked industry
Reciprocity-driven business model
Real-time data reporting
Founded: 2006
Headquarters: Atlanta, GA
18. 18
PRODUCT MIX & STRATEGY
C R E D I T L I F E C Y C L E S O L U T I O N S
19. 19
FactorTrust – Alternative Credit Bureau
• Dedicated & Proven auto finance
experience
• No CFPB Violations
• Regulatory compliance
• Loan performance – additive, loan debt
not in the big “3”
• Pay for performance pricing
• Rapidly expanding
– 400K Monthly
• Analytics
– Lend Protect Auto model
– Custom portfolio model
– Waterfall Data Process
• Credit data expertise
– 150+ years
