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Posts: 13,355
Registered: ‎12-30-2011
Re: Experian roles out new credit score
[ Edited ]

stan_the_man wrote:

Revelate wrote:



FWIW -- It doesn't have to reduce defaults, it just has to help them improve pricing to reduce their overall loses. For example, help creditors put higher risk customers into more expensive products.

Agreed, in general, but in the deep sub-prime unsecured market, increasing the profitability of a porfolio is often either reducing defaults, or more cynically stated, pushing the date of default further into the future of the loan.


Pricing models are not sophisticated in this strata, and when you go looking at the lenders in this space, it's pretty much one size fits all on the APR's (three-digits....) though compared to the roughly 400% on PDL fees, it's an excellent deal.  That's where I was looking at this score to be likely used and it's below the Capital One's of the world; typically anyone else only is going to offer secured products in this strata which in many cases obviates the need for this score anyway.


Edit: you may be right if the score provides better access for unsecured lending to no files, I just don't know how many people really exist other than dedicated cash-only folks who will get sorted in to the top in their new algorithm.




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