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What do you do when you need a great strategy to increase sales?  Well, you may abandon traditional methods in the underwriting process.  According to a new report from the Wall Street Journal, Ford Credit says it is looking at ways to increase loan and lease approvals for applicants with limited credit histories.  These consumers are often denied credit because they lack a history of managing debt and as a result have low credit scores.

This is GREAT NEWS for consumers who’ve been denied a loan due to a lack of credit history, bankruptcy or other financial problems.  Ford’s credit division plans to review new data to try to determine whether these customers with low credit scores are likely to repay their loans.

In 2015 and 2016, the subprime auto lending industry allowed consumers with blemishes on their credit reports to get financing.  While this helped to fuel new U.S. car sales that hit record highs, it also increased losses which in turn has caused many lenders to pull back on originations to risky borrowers.

However, because Ford Credit plans to review more data than it currently checks on loan applicants, they don’t think it will lead to more losses.  “No financial services firm would take that decision lightly,” says Jim Moynes, vice president of risk management at Ford Credit.

Other lenders, including some credit unions and online lenders, have also been assessing factors outside of credit reports.  One area of focus to drive loan volume is borrowers who have low credit scores because they haven’t used debt from banks and other mainstream lenders.

Regardless of how this plays out over the upcoming months and years for Ford Motor Company, this will be a positive move for those who need an auto loan but have a low credit score.


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