A score for a different type of lending

Payday lending is unlike the more traditional financing methods and therefore it attracts a much more diverse profile of applicant. 

Typically, its characteristics are:

• Loans from £100-£750
• Repayment by next pay day – average 15 days
• Applicant is employed and salary is paid directly to a bank account
• Repayment by Debit Card on pay day

The short term nature of the loan means that the applicant has, at the very least, a short term cash flow issue but at the same time it provides greater clarity with respect to repayment visibility.  When combined with the relatively low value of advances, the fact that the applicant is employed, the lender knows when the next pay day is and payment will be via a debit card should mean that the lender’s exposure is relatively low.  Of course this assumes that the applicant and application details have been authenticated, a credit check has been undertaken and a formal underwriting process has been employed including the use of a purpose built risk score.

A Score fit for purpose

Standard credit bureau and unsecured loan scorecards do not work well for pay day lending applications and therefore DecisionMetrics has constructed the Payday Lending Score, built specifically for the pay day lending market and therefore designed to cater for the diverse applicant profiles, small advances and short repayment periods.

Harnessing the predictive power of bureau data from Callcredit’s consumer database, the scorecard provides a powerful solution for the pay day lending market.

Key Benefits

• Increased Customer Insight – powerful discrimination specifically targeted at pay day lending applications
• Return on investment  - reduces bad debt and maximises acceptance rate
• Improved Customer Experience – reduces manual involvement  by ranking applicants by repayment likelihood thereby identifying those applicants suitable for fast tracked decisions

For more information, call DecisionMetrics on 01707 282640