As part of the Native American Financial Services Association, you’re aware that almost 40% of Americans have poor or no credit histories or are geographically isolated from traditional financial institutions—making it hard to secure mainstream credit. That’s why you’re in the business of providing services to these consumers, while aiding tribal economic growth.
Standing Out Among the Rest
There are many different types of loans in the credit space today, with a wide range that can meet the needs of pretty much any consumer. So how do you differentiate yourself from the other lenders and options out there? Easy. By offering consumers a more competitive rate than the competition. This might seem like a loaded statement, but the key here is to more precisely assess the borrowing habits of each consumer so you don’t increase risk when adding to your portfolio.
How the Competition is Creeping Up
Consumers using alternative financial services are becoming savvier and more informed on their options. They’re no longer taking the first loan or rate they’re handed. A perfect example is Experian® Boost. This is a consumer permissioned data program that allows consumers to add phone and utility payments to their credit profile, boosting their credit scores.Lenders see their good spending habits, reduce their loan rates,and voilà—they’ve captured the consumer.
More than ever, alternative credit data is needed for lenders and tribal lenders alike to keep up with the competition. Offer your lower-risk consumers the rates they deserve before the competition does, and it will be easier to retain them. Since more traditional lenders are incorporating alternative credit data in their underwriting models, non-prime consumers with positive AFS payments are starting to have access to loans with better terms.
Consumer Trends & What They Mean to You
Yes, alternative credit data can help you out tremendously as a tribal lender—and understanding your consumers and their trends and preferences can take you even further. Once you know the habits and demographics behind the non-prime market, you can connect with more consumers on a new level and offer them the financial services they really need.
We looked at application and loan data in Clarity’s specialty credit bureau from 2014 to 2018 and analyzed the financial behavior of more than 350 million consumers. In this report, we outline our findings by discussing market trends, changes in loan characteristics, credit quality and performance, consumer demographics, and consumer loyalty. Once you have an understanding of who your audience is and their presence in the online lending space, you’ll have an easier time aligning to their needs and be able to provide a more precise risk assessment.
Download the full report to learn more about non-prime consumer trends in the alternative financial services market.