DETROIT -- In an effort to make more accurate underwriting decisions, Ford Motor Credit Co. is ramping up its consumer credit-risk model to include additional data that would give the lender a better view of a car buyer's likelihood to make timely payments, the company said Friday.
Ford Credit and ZestFinance, a credit-decisioning technology platform, conducted a study this year in which each took the same sample of Ford Credit accounts from several years ago. ZestFinance used its methodologies and machine learnings to create risk models and place each customer on the credit spectrum -- labeling them superprime, prime, nonprime or subprime -- while Ford Credit used its traditional model to assess customers. The study then compared those credit ratings to the borrowers' actual payment history. Ford Credit declined to give the number of accounts studied, but said it was a "statistically reliable sample size."
The study found that ZestFinance's approach was more accurate in predicting the consumers' actual payment performance than Ford Credit's traditional model.
"That's important for all people in the finance space -- knowing at that particular point in time where that consumer falls on the risk spectrum and whether it falls within the risk appetite or not," Jim Moynes, vice president of risk management for Ford Credit, told Automotive News.