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Alternative credit scoring has become mainstream. Lenders that use alternative credit scores can find opportunities to expand their lending universe without taking on additional risk and more accurately assess the credit risk of traditionally scoreable consumers. Obtaining a more holistic consumer view can help lenders improve automation and efficiency throughout the customer lifecycle. What is alternative credit scoring? Alternative credit scoring models incorporate alternative credit data* that isn't typically found on consumer credit reports. These scores aren't necessarily trying to predict alternative outcomes. The goal is the same — to understand the likelihood that a borrower will miss payments in the future. What's different is the information (and sometimes the analytical techniques) that inform these predictions.Traditional credit scoring models solely consider information found in consumer credit reports. There's a lot of information there — Experian's consumer credit database has data on over 245 million consumers. But although traditional consumer data can be insightful, it doesn't necessarily give lenders a complete picture of consumers' creditworthiness. Alternative credit scores draw from additional data sources, including: Alternative financial services: Credit data from alternative financial services (AFS) can tell you about consumers' experiences with small-dollar installment loans, single-payment loans, point-of-sale financing, auto title loans and rent-to-own agreements. Buy Now Pay Later: Buy Now Pay Later (BNPL) borrowing is popular with consumers across the scoring spectrum, and lenders can use access to open BNPL loans to better assess consumers' current capacity. Rental payments: Landlords, property managers, collection companies, rent payment services and consumer-permissioned data can give lenders access to consumers' rent payment history. Full-file public records: Credit reports generally only include bankruptcy records from the previous seven to ten years. However, lenders with access to full-file public records can also learn about consumers' property deeds, address history, and professional and occupational licenses. READ: Take a deep dive into Experian's State of Alternative Credit Data report to learn more about the different types of alternative credit data and uses across the loan lifecycle. With open banking, consumers can now easily and securely share access to their banking and brokerage account data — and they're increasingly comfortable doing so. In fact, 70% would likely share their banking data for better loan rates, financial tools or personalized spending insights.Tools like Experian Boost allow consumers to add certain types of positive payment information to their Experian credit reports, including rent, utility and select streaming service payments. Some traditional scores consider these additional data points, and users have seen their FICO Score 8 from Experian boosted by an average of 13 points.1 Experian Go also allows credit invisible consumers to establish a credit report with consumer-permissioned alternative data.  The benefits of using alternative credit data The primary benefit for lenders is access to new borrowers. Alternative credit scores help lenders accurately score more consumers — identifying creditworthy borrowers who might otherwise be automatically denied because they don't qualify for traditional credit scores. The increased access to credit may also align with lenders' financial inclusion goals.Lenders may additionally benefit from a more precise understanding of consumers who are scoreable. When integrated into a credit decisioning platform, the alternative scores could allow lenders to increase automation (and consumers' experiences) without taking on more credit risk. The future of alternative credit scoring Alternative credit scoring might not be an alternative for much longer, and the future looks bright for lenders who can take advantage of increased access to data, advanced analytics and computing power.Continued investment in alternative data sources and machine learning could help bring more consumers into the credit system — breaking barriers and decreasing the cost of basic lending products for millions. At the same time, lenders can further customize offers and automate their operations throughout the customer lifecycle. Partnering with Experian Small and medium-sized lenders may lack the budget or expertise to unlock the potential of alternative data on their own. Instead, lenders can turn to off-the-shelf alternative models that can offer immediate performance lifts without a heavy IT investment.Experian's Lift PlusTM score draws on industry- leading mainstream credit data and FCRA-regulated alternative credit data to provide additional consumer behavior insights. It can score 49% of mainstream credit-invisible consumers and for thin file consumers with a new trade, a 29% lift in scoreable accounts. Learn more about our alternative credit data scoring solutions. Learn more * When we refer to “Alternative Credit Data," this refers to the use of alternative data and its appropriate use in consumer credit lending decisions as regulated by the Fair Credit Reporting Act (FCRA). Hence, the term “Expanded FCRA Data" may also apply in this instance and both can be used interchangeably.1Experian (2023). Experian Boost

E-commerce digital transactions are rapidly increasing as online shopping becomes more convenient. In fact, e-commerce is projected to exceed 17% of all retail sales worldwide by 2027. As a result, opportunities for fraudsters to exploit businesses and consumers for monetary gain are reaching high levels. Businesses must be aware of the risks associated with card not present (CNP) fraud and take steps to protect themselves and their customers. What is card not present fraud? CNP fraud occurs when a criminal uses a stolen or compromised credit card to make a purchase online, over the phone, or through some other means where the card is not physically present at the time of the transaction. This type of fraud can be particularly difficult to detect and prevent, as it relies on the use of stolen card information rather than the physical card itself. CNP fraud can yield significant losses for businesses — these attacks are estimated to reach a staggering $28 billion in losses by 2026. Many have adopted various fraud prevention and identity resolution and verification tools to better manage risk and prevent fraud losses. Since much of the success or failure of e-commerce depends on how easy merchants make it for consumers to complete a transaction, incorporating CNP fraud prevention and identity verification tools in the checkout process should not come at the expense of completing transactions for legitimate customers. What do we mean by that? Let’s look at false declines. What is a false decline? False declines occur when legitimate transactions are mistakenly declined due to the business's fraud detection system incorrectly flagging the transaction as potentially fraudulent. This can not only be frustrating for cardholders, but also for merchants. Businesses may lose the sale and also be on the hook for any charges that result from the fraudulent activity. They can also result in damage to the business's reputation with customers. In either case, it is important for businesses to have measures in place to mitigate the risks of both. How can online businesses increase sales without compromising their fraud defense? One way to mitigate the risk of CNP fraud is to implement additional security measures at the time of transaction. This can include requiring additional verification information, such as a CVV code or a billing zip code to further authenticate the card holder’s identity. These measures can help to reduce the risk of CNP fraud by making it more difficult for fraudsters to complete a transaction. Machine learning algorithms can help analyze transaction data and identify patterns indicating fraudulent activity. These algorithms can be trained on historical data to learn what types of transactions are more likely to be fraudulent and then be used to flag potentially fraudulent transactions before it occurs. Businesses require data and technology that raise confidence in a shopper’s identity. Currently, the data merchants receive to approve transactions is not enough. A credit card owner verification solution like Experian Link fills this gap by enabling online businesses to augment their real-time decisions with data that links customer identity to the credit card being presented for payment to help verify the legitimacy of a transaction. Using Experian Link, businesses can link names, addresses and other identity markers to the customer’s credit card. The additional data enables better decisions, increased sales, decreased costs, a better buyer experience and better fraud detection. Get started with Experian Link™ - our frictionless credit card owner verification solution. Learn more

In the last decade, electric vehicle registrations have increased by 3,600%, and the demand for alternative fuel vehicles continues to soar. Manufacturers are rapidly expanding alternative fuel operations to keep up with the demand from consumers that has expanded across all generations. Target in-market EV consumers Today’s automotive marketers understand that finding targeted consumer audiences is critical to a successful marketing strategy. With more electric vehicle model options available and improved infrastructure driving popularity, we’re seeing automotive marketers wanting to target in-market EV consumers as well as current alternative fuel vehicle owners. Applying data-driven insights to find targeted consumer audiences is critical to today’s marketing strategies. For example, as of Q2 2022, 23.5% of plug-in hybrid owners that returned to market, migrated to an electric vehicle As a marketer, would it be helpful to select In-Market Likely Segment Switchers as your target audience for your marketing campaign? Or Hybrid owners as a whole? Experian Automotive has a variety of alternative fuel owner audiences and in-market consumer audiences to help marketers target the right consumer with the right message on the right channel. The Experian Marketing Engine Syndicated Auto Audience portfolio includes 70+ audiences focused on likely buyers and owners of Electric Vehicle (EV) and Plug-In Hybrid (PHEV) vehicles. Of Experian’s 750+ syndicated auto audiences, we offer a subset of over 25 audiences focused on individual EV/PHEV vehicle models. How to find EV audiences on your preferred platform Experian electric vehicle audiences are available in the Auto Audience area of your preferred platform.  Simply navigate to Experian Automotive’s Audiences to find Electric Vehicle related audiences, as well as all of Experian’s Auto Audiences.  To learn more about Auto Audiences for Electric Vehicles, contact our Subject Matter Expert, Gary Meteer.

For a credit prescreen marketing campaign to be successful, financial institutions must first define their target audience. But just because you’ve identified your ideal customers, it doesn’t mean that every individual within that group has the same needs, interests or behaviors. As such, you’ll need to use data-driven customer segmentation to create messages and offers that truly resonate. Customer segmentation example Customer segmentation is the practice of dividing your target audience into smaller sub-groups based on shared characteristics, behaviors or preferences. This allows you to develop highly targeted marketing campaigns and engage with individual groups in more relevant and meaningful ways. What role does data play in customer segmentation? When it comes to segmenting customers, there isn’t a one-size-fits-all approach that works perfectly for all campaigns and markets. However, regardless of the campaign, you’ll need accurate and relevant data to inform your segmenting strategy. Let’s walk through a customer segmentation example. Say you want to launch a credit marketing campaign that targets creditworthy consumers in the market for a new mortgage. Some of the most influential data points to consider when segmenting include: Demographics Demographic data allows you to get to know your customers as individuals in terms of age, gender, education, occupation and marital status. If you want to create a segment that consists of only middle-aged consumers, leveraging demographic data makes it easier to identify these individuals, refine your messaging and predict their future buying behaviors. Life stage Life event data, such as new parents and new homeowners, helps you connect with consumers who have experienced a major life event. Because you’re targeting consumers in the market for a new mortgage, using fresh and accurate life stage data can help you create an engaging, event-based marketing campaign relevant to their timeline. Financial Financial data segments go beyond income and estimate the way consumers spend their money. With deeper insights into customers’ financial behaviors, you can more accurately assess creditworthiness and make smarter lending decisions. Transactional Transactional data segments group your customers according to their unique buying habits. By getting to know why they purchase your products or their frequency of spend, you can gain a better understanding of who your most engaged customers are, segment further and find opportunities for cross-sell and upsell. Why is data-driven customer segmentation critical for your business? With data-driven customer segmentation, you can develop relevant marketing campaigns and messages that speak to specific audiences, enabling you to demonstrate your value propositions more clearly and deliver personalized customer experiences. Additionally, because customer segmentation enables you to tailor your marketing efforts to those most likely to respond, you can achieve higher conversions while cutting down on marketing spend and resources. Ready to get started? While data-driven customer segmentation may seem overwhelming, Experian can help fill your marketing gaps with custom-based data, audiences and solutions. Armed with a better understanding of your consumers’ patterns and journeys, you can start targeting them more effectively. Create highly targeted credit marketing campaigns

Strategic automotive marketing and measurement are getting more complicated with the increase in consumer channels and devices. This makes it harder for marketers to obtain a complete measurement picture. Measurement terminology is also evolving. Here's a look at some of today’s key definitions to familiarize you with the nuances and challenges it may already bring to your analytics. What is the open web? The open web is the web as a whole or the public side of the web with all the millions of sites that do not require a subscription or fee to use them. For example, in our industry, this would be an auto manufacturer’s website, a dealership’s website, or an online consumer shopping portal where you list your vehicles for sale – all of these are on the open web. These sites use open-source standards to deliver content to consumers without a separate app or company acting as gatekeepers. However, tracking approaches on the open web will shift as cookies will eventually disappear. What is a walled garden? A walled garden is a closed platform or ecosystem (e.g., Amazon, Apple, Facebook) wherein the platform provider controls the content, applications, and/or media and restricts access as it sees fit. The publisher offers consumer privacy and rich first-party data to advertisers, but the measurement is limited to activity within the ‘walls’ of the garden.  From an advertising perspective, buyers can only access these platforms through their own buying tools; they do not give access to any independent platforms. The publisher (the Walled Garden) handles all the buying, serving, tracking, and reporting within their ecosystem.  So, let’s say you are an automotive consumer checking out vehicles. If you’re reading your Facebook feed on your phone and you see an advertisement for a vehicle or a dealership, that OEM or dealership is advertising in a walled garden – in this case, the walled garden is Facebook. The challenge to an advertiser is that they can only measure activity that occurred within that ecosystem using the walled garden’s platform and measurement tools. What is a hedged garden? The “hedged garden” is a new industry concept. A hedged garden is when a network of publishers work together to activate first-party data sets in a privacy-compliant way across many partners at scale. These publishers run their businesses with large amounts of first-party consumer data. They often do not own or operate complete buying stacks. For example, companies like Target and Walmart let advertisers employ their data on shoppers for ad targeting, but brands can use their own buying tools. Other examples of a hedged garden might include Connected TV platforms such as Vizio’s or Samsung’s in-house ad businesses. If you’re sitting on your couch watching your Vizio-connected TV and you see an advertisement for a dealership or a manufacturer, they are advertised within that hedged garden.  As an advertiser, the advantage is that you can use their buying tool when targeting shoppers for your advertising. How to fill in the gaps the walled garden may leave open The walled garden can challenge marketers who desire cross-channel activation and measurement. If you're a marketer working within a walled garden, we can work with the data you have to give you a complete picture of your audience’s digital journey. Our experience and vast databases, including vehicle, credit, and customer insights, allow us to continue building strong partnerships within the fast-growing (Hedged Garden) ecosystem. We can help. Our Subject Matter Expert, Laurel Malhotra will be happy to answer any questions you may have. Contact her today.

According to Experian’s Automotive Market Trends Report: Q3 2022, new vehicle registrations were down 16.4%, going from 12.2 million through Q3 2021 to 10.2 million this quarter. Used vehicles experienced a 12.6% decline, coming in at 29.8 million through Q3 2022, from 34.1 million the previous year.

In recent blog posts, we’ve discussed growing in a down market and getting ahead with a proactive outreach and engagement strategy. In this article, we’ll focus on audience segmentation and multichannel marketing. As the market has shifted, effective cost management is a top priority. Lenders who get the most bang for their buck tend to use data to create their audience, segment and message. Best practice #1: audience segmentation It’s hard to beat the combination of credit and property data for mortgage lenders. Obtaining a holistic consumer view and property details (if they’re a homeowner), can help lenders determine the best mortgage product and refine their messaging. Many of our partners have great success leveraging a combination of property and credit insights to identify consumers for a home equity line of credit (HELOC) or new first mortgages. Let’s look at HELOC as an example. From a process perspective, we use property data to identify borrowers with properties that qualify for the lender’s HELOC program – sufficient equity, owner occupied, no tax liens, not listed for sale, a value below their upper lending bound, etc. Once the initial population is identified, we further segment their target population by adding key credit insights, such as current score and outstanding unsecured debt. This allows the lender to identify borrowers who qualify for their HELOC program and do specific outreach for either debt consolidation or remodel. By performing the equity and credit analytics with a single vendor, the lender can increase their speed to market.  The results? Lenders succeed by quickly reaching the right borrowers, with the right offer and message. Additionally, they don’t waste money on or disappoint applicants who don’t meet their program guidelines. Best practice #2: refining the message The next best practice I’d like to focus on is refining the message with relevant demographic and consumer behavior data. Experian studied the differences among consumers who recently purchased a home, those who recently secured a HELOC, and the general consumer population.   Look at these four categories from our Mosaic Group and consider how you would adjust your messaging if you really know your prospect? Might you incorporate different imaging for a Power Elite homeowner in your HELOC campaign than a Flourishing Family to whom you are marketing a first mortgage?   Or consider how different decision-making styles would impact the information you highlight in your outreach?  Look at the difference between HELOC borrowers and first mortgage borrowers in terms of their decision-making style. Different messaging will appeal to a consumer who is a brand loyalist versus someone who is a savvy researcher.  Best practice #3: omnichannel marketing strategy Finally, let’s focus on how best to reach the consumer. Not only is it important to meet consumers on their preferred channel, but a best practice is to execute an omnichannel strategy. We increasingly see lenders using emails in prescreen campaigns with invitations to apply, or ITAs, across multiple communication channels.  Look at the overall research for email, text, and direct mail. Increasingly, savvy marketers are asking us for emails in their prescreen campaigns, and it’s no surprise. Based on the research, a tailored email campaign can be very effective. Perhaps most surprising is the level of mortgage borrower engagement in streaming TV! This is just the tip of the iceberg in terms of how data can be sliced and diced to drive your omnichannel engagement strategy. In short, when executing a mortgage marketing campaign, it’s important to leverage available data for audience segmentation. Once your audience is identified, you’ll want to refine your message to resonate with each segment. Lastly, instituting a multichannel marketing strategy is key to ensuring you’re getting in front of your audience in the channel they’re most likely to engage. By adopting these best practices, you’ll reach the right borrower, with the right message, in the right channel, which, in-turn, will help boost the ROI of your marketing program.  To learn about Experian Mortgage solution offerings, click here. Learn more

With an abundance of loan options in today’s market, retaining customers can be challenging for banks and credit unions, especially small or regional institutions. And as more consumers look for personalization and digital tools in their banking experience, the likelihood of switching to institutions that can meet these demands is increasing.1 According to a recent Experian survey, 78% of consumers have conducted personal banking activities online in the last three months. However, 58% of consumers don’t feel that businesses completely meet their expectations for a digital online experience. To remain competitive in today's market, organizations must enhance their prescreen efforts by accelerating their digital transformation. Prescreen in today's economic environment While establishing a strong digital strategy is crucial to meeting the demands of today’s consumers, economic conditions are continuing to change, causing many financial institutions to either tighten their marketing budgets or hold off on their prescreen efforts completely. Fortunately, lenders can still drive growth during a changing economy without having to make huge cuts to their marketing budgets. How? The answer lies in digital prescreen. Case study: Uncover hidden growth opportunities Wanting to grow their business and existing relationships, Clear Mountain Bank looked for a solution that could help them engage customers with money-saving product offers while delivering a best-in-class digital banking experience. Leveraging Digital Prescreen with Micronotes, the bank was able to identify and present dollarized savings to customers who held higher-priced loans with other lenders. What’s more, the bank extended these offers through personalized conversations within their online and mobile banking platforms, resulting in improved digital engagement and increased customer satisfaction. By delivering competitive prescreen offers digitally, Clear Mountain Bank generated more than $1 million in incremental loans and provided customers with an average of $1,615 in cost savings within the first two months of deployment. “Digital Prescreen with Micronotes supplied the infrastructure to create higher-quality, personalized offers, as well as the delivery and reporting. They made prescreen marketing a reality for us.” – Robert Flockvich, Director of Community Outreach and Retail Lending at Clear Mountain Bank To learn more about how you can grow your portfolio and customer relationships, read the full case study or visit us. Download the case study Visit us 1The Keys to Solving Banking’s Customer Loyalty & Retention Problems, The Financial Brand, 2022.

Driving growth in a down mortgage market can be tricky. It’s a mad scramble to obtain quality mortgage leads that convert into profitable loans. At Experian Mortgage, we have a front row seat into the efficacy of different lead generation strategies, and what we know for certain, is that data matters in both the audience creation and outreach approach. I’ve compiled several best practices for identifying qualified prospects early in the homebuying journey and using analytics to focus your outreach on those most likely to convert. Best practice #1: credit-based triggers First, let’s focus on borrower-behavior triggers, as they’re key for getting ahead of the competition. I occasionally hear skepticism about tried-and-true credit-based prospect triggers, but many find them indispensable. Credit triggers alert you when borrowers apply for credit and when other indicators meet your specific lending criteria, including credit scores, score trends, credit limits, utilization and much more.  They’re effective – and not just for big lenders. Our clients leverage credit-based triggers to quickly pursue “hot leads,” and have reported higher response rates, lower acquisition costs and revenue growth. Best practice #2: property listing triggers Another borrower behavior to watch is listing a property for sale, which can be done using property listing triggers. You can use listing triggers to monitor current customers – and with Experian, you can prospect for new customers outside your portfolio. One of our clients instituted property listing triggers and immediately identified 40,000 homeowners in their footprint who had recently listed a property for sale. Experian research shows that a homeowner lists their property for sale, on average, 35 days before applying for a new mortgage. This means this lender had over a month to reach those consumers with a tailored message. Now that’s getting a jump on the competition! But what about those homeowners who list a property for sale but don’t move? We hear anecdotally about more homeowners putting their homes on the market to see what offers they can get. According to recent data, a higher percentage of listings fail to sell today than last year. While property listing remains one of the most predictive behaviors for purchase, there’s room to optimize. Whether your prospect came to you via a property or credit trigger, there’s an opportunity to improve your ROI by identifying trigger leads most likely to convert. Best practice #3: in-the-market models A key best practice in audience segmentation is to incorporate in-the-market models (ITMM). A good model is based on sophisticated analytics across hundreds of data elements and millions of loan applications. Additionally, a good model is tailored to your product. A consumer in the market to buy their first house will “look” very different than a consumer in the market for a Home Equity Line of Credit (HELOC). Experian clients are doing two impactful things with ITMM. First, they create their audience list by bundling ITMM with credit, income, and property data to identify qualified consumers likely to be in the market soon. Second, they optimize an existing marketing list. However, when it comes to a mortgage lead generation program, you can only optimize what you measure. Experian has been helping clients by analyzing their lost leads and lost loans. Several clients recently asked us to analyze their efficacy with marketing lists originating from digital mortgage lead aggregators (i.e., lists of consumers who sought information online about mortgages). I’ll focus here on the leads who did NOT originate a mortgage with our clients, but DID open a tradeline with someone else. My first observation is that prospects who opened a tradeline were significantly more likely to open a credit card than a mortgage. My second observation is when the prospect opened a mortgage loan with a different institution, 80% of the time that lender was a non-bank. This is higher than the current non-bank share of the market, which indicates non-banks are aggressive with their leads and poised to grow their share. Here’s where ITMM comes into play. By incorporating an ITMM specifically for your product – HELOC, purchase, refinance – you can focus attention on borrowers most likely to open a mortgage. In summary, instituting credit and property triggers is a critical best practice and will open the door to a plethora of prospects. If you want to level up your marketing strategy, incorporating an ITMM is key and will help you segment the trigger leads and home in on those that are most likely to convert. Be sure to check out the final blog post in this series, Lead Conversion Through Tailored Messaging and a Multichannel Mortgage Marketing Strategy. To learn about Experian Mortgage solution offerings, click here. Learn more

Financial institutions have gone through a whirlwind in the last few years, with the pandemic forcing many to undergo digital transformations. More recently, rising interest rates and economic uncertainty are leading to a pullback, highlighting the need for lenders to level up their marketing strategies to win new customers. To get started, here are a few key trends to look out for in the new year and fresh marketing ideas for lenders. Challenges and consumers expectations in 2023 It might be cliche to mention the impact that the pandemic had on digital transformations — but that doesn't make it any less true. Consumers now expect a straightforward online experience. And while they may be willing to endure a slightly more manual process for certain purchases in their life, that's not always necessary. Lenders are investing in front-end platforms and behind-the-scenes technology to offer borrowers faster and more intuitive services. For example, A McKinsey report from December 2021 highlighted the growth in nonbank mortgage lenders. It suggested nonbank lenders could hold onto and may continue taking market share as these tech-focused lenders create convenient, fast and transparent processes for borrowers.2 Marketers can take these new expectations to heart when discussing their products and services. To the extent you have one in place, highlight the digital experience that you can offer borrowers throughout the application, verifications, closing and loan servicing. You can also try to show rather than tell with interactive online content and videos. Build a data-driven mortgage lending marketing strategy The McKinsey report also highlighted a trend in major bank and nonbank lenders investing in proprietary and third-party technology and data to improve the customer experience.2 Marketers can similarly turn to a data-driven credit marketing strategy to help navigate shifting lending environments. Segment prospects with multidimensional data Successful marketers can incorporate the latest technological and multidimensional data sources to find, track and reach high-value prospects. By combining traditional credit data with marketing data and Fair Credit Report Act-compliant alternative credit data* (or expanded FCRA-regulated data), you can increase the likelihood of connecting with consumers who meet your credit criteria and will likely respond. For example, Experian's mortgage-specific In the Market Models predict a consumer's propensity to open a new mortgage within a one to four-month period based on various inputs, including trended credit data and Premier Attributes. You can use these propensity models as part of your prescreen criteria, to cross-sell current customers and to help retain customers who might be considering a new lender. But propensity models are only part of the equation, especially when you're trying to extend your marketing budget with hyper-segmented campaigns. Incorporating your internal CRM data and non-FCRA data can help you further distinguish look-alike populations and help you customize your messaging. LEARN MORE: Use this checklist to find and fix gaps in your prospecting strategy Maintain a single view of your borrowers An identity management platform can give you a single view of a consumer as they move through the customer journey. The persistent identity can also help you consistently reach consumers in a post-cookie world and contact them using their preferred channel. You can add to the persistent identity as you learn more about your prospects. However, you need to maintain data accuracy and integrity if you want to get a good ROI. Use triggers to guide your outreach You can also use data-backed credit triggers to implement your marketing plan. Experian's Prospect Triggers actively monitors a nationwide database to identify credit-active consumers who have new tradelines, inquiries or a loan nearing term. Lenders using Prospect Triggers can receive real-time or periodic updates and customize the results based on their screening strategy and criteria, such as score ranges and attributes. They can then make firm credit offers to the prospects who are most likely to respond, which can improve cross-selling opportunities along with originations. Benefit from our expertise Forward-thinking lenders should power their marketing strategies with a data-backed approach to incorporate the latest information from internal and external sources and reach the right customer at the right time and place. From list building to identity management and verification, you can turn to Experian to access the latest data and analytics tools. Learn about Experian credit prescreen and marketing solutions. Explore our credit prescreen solutions Learn about our marketing solutions 1Mortgage Bankers Association (October 2022). Mortgage Applications Decrease in Latest MBA Weekly Survey 2McKinsey & Company (2021). Five trends reshaping the US home mortgage industry

Experian’s State of the Automotive Finance Market Report: Q3 2022 found that consumers with credit scores between 300 and 660—also considered as the nonprime segments—are continuing to opt for used vehicles rather than new.

Conventional credit scoring systems are based on models developed over six decades. As consumer behavior evolves, it's important to seek newer, fresher sources of data to assess creditworthiness. Because the data used by conventional credit scoring models does not provide the full picture of a consumer's financial health, a large population segment of the United States is excluded from accessing credit.With changing times and new technology, forward-thinking financial institutions are using alternative data1 to gain a more holistic consumer view. A move toward inclusive finance, including incorporating alternative data in credit scoring models, is a crucial step towards promoting financial inclusion and helping millions of consumers achieve their financial and personal goals. More importantly, it provides the insight needed for lender confidence, which can help fuel business growth. Understanding limitations of the conventional scoring system Credit scores can be obtained from any one of the major credit bureaus based on information found in a consumer's credit report and are incorporated into a lender's credit-decisioning process. While there are various credit scoring models based on lender preference that could yield slightly different scores, all traditional scores are comprised of credit characteristics within these categories: payment history, credit mix, credit history length, amounts owed and new credit account inquires. Lenders use past credit performance to predict whether extending credit is a risk, posing a major challenge for credit invisible and thin-file consumers and leaving millions at a disadvantage. This dilemma also limits business growth for lenders. Consumers who are unable to access mainstream credit often turn to the alternative financial services (AFS) industry, a $140 billion market that continues to grow by 7-10 percent each year.2 The AFS industry offers consumers additional products, like payday loans, cash advances, short-term installment loans, and rent-to-own loans, none of which are included in a traditional credit file. With alternative credit data, lenders can obtain a more holistic view of creditworthiness and risk, helping to enhance inclusive lending by broadening their pool of potential loan candidates. Why conventional scoring models simply aren't enough Because of the criteria used to assess creditworthiness, conventional credit scoring models do not accurately capture an individual's financial behavior or health. Indeed, many people demonstrate financial responsibility in other legitimate ways that are not reported to the major credit bureaus.In contrast, non-traditional data considers a consumer's everyday financial behavior to provide a more accurate score for lenders. It can include a range of indicators, such as: Bill payments: Consistent payment history on typical household bills (which may have been paid from a debit account). Bank account data: Shows average balance and withdrawal activity and recurring payroll deposits (indicating that a consumer is employed and receives a regular income). Rental data: Indicates a consumer's long-term stability in making regular, on-time monthly rent payments. Registered licenses: Registered licenses or membership with a skilled  trade or profession can indicate the likelihood to generate income. Including this type of data can benefit both lenders and applicants. According to an Experian report, by adding alternative credit data to a near-prime population, lenders could see an increase in approvals for consumers historically being left behind. When Clear Early Risk Score™ is paired with the VantageScore® credit score, approvals climb to 16 percent of the population inside the same risk criteria, representing a 60 percent lift in credit approvals for near-prime consumers.2 The pool of people from whom this type of alternative data can reliably be collected is growing, with 70 percent of consumers willing to provide additional financial information to a lender if it increases their chance for approval or improves their interest rate for a mortgage or car loan.3 Plenty of available yet untapped data exists that can add value to a consumer's profile and lead to greater inclusive lending. For example, 95 percent of Americans own a cell phone and about two-thirds of households headed by young adults are being rented. Reporting on this data could potentially "thicken" a credit file and provide deeper insight into a consumer's credit behavior.3Indeed, turning to non-traditional data can expand the credit universe and lead to more inclusive credit scoring models, especially by leveraging existing technology and financial inclusion solutions. Research shows that with Lift Premium™, virtually all of the 21 million conventionally unscorable consumers would become scoreable, and over 1 million of them would have scores in the near-prime range or better. Of these, 1.7 million would be Black American and Hispanic/Latino people.3 For lenders, these numbers reveal potential opportunities to grow their businesses. Of the 255 million adults in the U.S., 19 percent of credit eligible adults are left out of mainstream scoring systems. 28 million are considered credit invisible – meaning they have no credit history (11%). 21 million are considered unscorable – have partial credit history but not enough to generate a score using conventional models (8%). Of the remaining credit eligible adults, 57 million were considered subprime (22%). 106 million U.S. adults can't get mainstream credit rates (42%). Adopting inclusive finance lending practices is not only the right thing to do but also provides financial institutions with the chance to reach untapped markets, grow their business and promote a healthier economy. Financial inclusion is not a destination, but an ever-evolving journey. Don't miss out on this critical opportunity to join the movement. Learn more about our financial inclusion tools to help enhance your inclusive lending approach. 1"Alternative Credit Data,” refers to the use of alternative data and its appropriate use in consumer credit lending decisions, as regulated by the Fair Credit Reporting Act. Hence, the term “Expanded FCRA Data” may also apply in this instance and both can be used interchangeably.2Experian: 2020 State of Alternative Credit Data.3Oliver Wyman white paper, “Financial Inclusion and Access to Credit," January 12, 2022.

The collections landscape is changing due to shifting consumer behaviors, demands, regulations and an economy that’s in a constant state of flux. As the market evolves, the need for greater insight and analysis grows. Matthew Baltzer, Experian’s Senior Director of Product Marketing, discusses challenges facing the collections industry and how you can continue to build a profitable portfolio. For more information on enhancing your collections strategy, view our full Q&A video. Q: Which macroeconomic trends should debt collectors be the most aware of and why? A:While we are still seeing a reasonably healthy consumer, there are trends to monitor. The first would be employment, which continues to be strong. Laid-off individuals are typically able to move back into the labor force. Second, we're seeing strong consumer spending, with rates higher than in the past three years and high origination activity. A third is declining savings rates. During the pandemic, consumers stored away extra cash, which has since come to a halt. Part of that is likely due to inflation, but it could also point to signs of financial strain. Q: How could these trends impact debt collections strategies moving forward? A: At a portfolio level, they’re good news. The average consumer’s ability to pay has yet to degrade significantly. So, collectors should be able to continue collecting payments. However, six months from now, the impact of inflation and interest rates could take a toll, and settlement offers, or higher upfront payments, may be important tools to consider. Due to increasing interest rates, many households will send money to creditors, leaving less for everyday spending. Q: How has the average consumer been affected by inflation? A: As I mentioned, both consumer spending and overall debt are up. However, when it comes to spending, certain ‘categories’ are more impacted by inflation than others. Of course, home equity and mortgages are higher, which while important, is less impactful for debt collectors. In our recent webinar, ‘Economic Outlook and the Influence on Debt Collections,’ we highlighted the uneven impact inflation has on lower earners in categories such as rent, food and energy. Due to this, collectors may see a rise in delinquency rates, particularly in unsecured personal loans and potentially automotive loans. Q: How should consumers' response to inflation impact collections efforts? A: There may be an increase in opportunities in certain trades, such as utilities, automotive and unsecured personal loans. Are you positioned as an organization to target and serve those markets? For those in the industry, the real potential for an economic weakness should present an opportunity to evaluate your collection strategy. How will you adapt to a 20 to 30% increase in volume? What about working accounts with smaller balances, which we've seen more of since the last larger recession? Experian offers software and decisioning solutions that help debt collectors optimize their strategies for an improved return on investment. Q: What consumer specific data can help lenders better predict distressed consumers? A: As an originator, the first approach to consider should be leveraging new types of data that were not available during the last recession, such as trended, third-party and alternative credit data. Supplementary data can provide leading indicators that risk is increasing before a consumer goes delinquent and their accounts are past due. Additionally, advanced analytics scoring models can help you determine which accounts are more likely to be recoverable. Experian has a new scoring model that uses a complex blend of attributes to assess each trade's history and position in wallet to better predict the likelihood of that account self-curing and separate accounts that need the most attention from those that may need more time. Finally, with accurate consumer contact data, you can enhance your digital engagement strategy and reach the right person, at the right time, on the channel they prefer There’s no time like the present to equip yourself with a successful debt management strategy. With a more holistic consumer view, you can improve account prioritization, predictability and right-party contact rates. Learn more about our debt management solutions here. Watch on-demand webinar

Today’s mortgage market is challenging. Mortgage lenders and servicers will need to focus on product expansion to continue to grow their business. In a recent Q&A session, Susan Allen, Head of Product for Experian Mortgage, shared best practices for leveraging data for profitable growth.Q: At a high level, how can mortgage lenders and servicers grow their businesses?A: There are a lot of options to increase pipeline. One best practice we’re seeing now is to consider expanding both your product suite and your footprint. Very few lenders offer a comprehensive set of solutions in a national footprint. But demand is strong for solutions that go beyond traditional 30-year fixed-rate mortgages, including options to tap home equity. These types of products can help you grow your business by exposing you to new borrowers and broadening your relationships with clients. For example, we see several clients, even non-banks, venturing into credit cards and personal loans to meet their customers’ broader financial needs.Q: You mentioned demand for home equity solutions is strong. What should lenders consider when it comes to home equity loan growth strategies?A: The current record level of untapped equity makes home equity lines of credit (HELOCs) attractive for borrowers to use for debt consolidation, remodeling or to add to their rainy-day fund. For lenders to decide whether HELOCs would be profitable for their business, they should look broadly at data about borrowers, volumes and indicators of profitability, such as credit lines and utilization.Q: It’s one thing to talk about the HELOC market, but does Experian have any home equity data to show what’s happening in this space?A: Absolutely. We’re seeing several things when it comes to home equity data. First, HELOC volumes have doubled since January 2021, which indicates strong borrower interest. Second, we know that home prices are at record highs across the board, and we see this record of “tappable” equity translating into credit lines well over $100,000. What’s more, we’re seeing borrowers drawing down consistently at $37,000 on average, which is a healthy and profitable utilization rate. Lastly, greater than 90% of HELOC borrowers have a prime or super prime credit score. Our data shows HELOC borrowers have higher credit scores than new purchase borrowers. Additionally, conventional wisdom says that HELOCs are for seasoned homeowners, but according to the data, the younger generation of homeowners has tripled their HELOC originations. I’ve been in this industry for a long time, and to be honest, this shocked me. This makes it clear that it’s always important (especially for industry veterans) to constantly update our understanding of current market dynamics. Q: Wow, it sounds like expansion into home equity solutions is a no-brainer. What am I missing? A: HELOCs are a strong and growing market segment. But it’s not sufficient to look only at opportunity. We must also use the best data at our disposal to evaluate risk. With HELOC performance impacted by property values, recent concern over the stability of home prices is causing some lenders to pause. Clients tell us they would like to expand their HELOC offerings but aren’t sure when or where to start. Q: So, what’s the answer here?A: Data is key to taking the guesswork out of decisions. When it comes to HELOC expansion, lenders voice concern specifically about home price forecasts. Although it is notoriously hard to forecast home prices, you can use actual, current data to inform decisions about where and when to expand a home equity portfolio. For example, lenders can use listing data to gauge markets shifting from a “seller’s market” to a “buyer’s market.”Q: Susan, this has been a great discussion. Any final thoughts? A: As I’ve shared, great opportunities exist. With best-in-class data and analytics, lenders can find these opportunities and propel their businesses forward. Be sure to read the other blog posts in this series:Getting Ahead with a Proactive Mortgage Outreach and Engagement StrategyLead Conversion Through Tailored Messaging and a Multichannel Mortgage Marketing Strategy To learn about Experian Mortgage solution offerings, click here.

In honor of all the marketers who frantically created and activated audiences for Cyber Five sales (Thanksgiving Day through Cyber Monday), this blog announcing a resource for automotive marketers on how to best activate their automotive audiences is timely! I realize the following spending stats are totals for consumer spending, not just automotive consumer spending, but these dollar amounts put advertising and media spending into perspective. Adobe Analytics reported that consumers spent $35.4 billion online over the Cyber Five period this year, breaking a record. Many marketing campaigns ran on various channels to reach that many consumers. Strategic campaign development is key to effective activation Marketers know all the hard work that goes on behind the scenes before media is activated. As automotive marketers, let’s recap what typically happens before activation even begins. It is common to begin by linking fragmented consumer data across channels, platforms, and devices into unified customer profiles for more effective cross-channel targeting. Using identity solutions helps marketers target the right consumers on the right channels. After unifying customer profiles, marketers often look at auto-specific market, vehicle, and consumer data insights to help gain a deeper understanding of market competition and opportunities, vehicle interest, and critical consumer information (demographics, psychographics, etc.) Next, many marketers leverage automotive, lifestyle, and predictive data to target specific consumer segments across all channels for true omnichannel marketing. Once this is complete, marketers can choose their audience, depending on what their goals are and which channels they are focusing on. Once all this pre-work is finished (and I over-simplified all the hard work behind these steps), marketers need to Activate their campaigns by selecting the best channels. Leverage various media partners and platforms At Experian Automotive, we believe marketers can improve their ability to reach their intended audience participants and measure their overall campaign results if they are strategic during Activation. Leveraging various media partners and platforms allow marketers to activate audiences more effectively and execute more strategic, measurable, multi-channel marketing campaigns. The key is to find a vast network of media destinations and onboarding capabilities that empowers you to activate audiences and connect with a single audience across channels delivering personalized, addressable experiences. To help auto marketers understand all the areas of Activation, we’ve written a resource, How to Activate Your Audience on the Most Strategic Channels, that you can download now. We’ve also written these other resources to help automotive marketers use data insights to develop more strategic, measurable marketing campaigns. They are all complimentary so feel free to download them too! Identity Solutions: Helping Marketers Deliver Personalized Communication for Life Audiences: Automotive Audience Choices are Key to Ever-Changing Strategies Customer Insights: Understand Your Customer Before Choosing Your Audience Measurement: Measuring Marketing Performance is Critical to Long-Term Succes