Lending institutions need to use the right business strategies to win more business while avoiding unnecessary risk, especially regarding lending policies. A recent study revealed that 48% of American loan applicants have been denied over the past year, with 14% facing multiple rejections. Additionally, 14% of rejected applicants felt pressured to seek alternative financing like cash advances or payday loans.1
These statistics highlight the need for financial institutions to offer attractive loan options to stay ahead in the industry.
Understanding loan loss analysis
Loan loss analysis is a powerful tool that helps lenders gain insights into why applicants book loans elsewhere. Despite efforts to target the right consumers at the right time with optimal offers, applicants sometimes choose to book their loans with different institutions. The lack of visibility into where these lost loans are booked can hinder a lender’s ability to improve their offerings and validate existing policies.
By leveraging loan loss analysis, lenders can turn valuable data into actionable insights, creating more profitable business opportunities throughout the entire customer lifecycle.
Gaining deep consumer insights
Loan loss analysis provides visibility into various aspects of competitors’ loan characteristics, such as:
- Type of financial institution: Identifying whether applicants prefer banks, credit unions or finance companies can help lenders tailor their offerings.
- Average loan amount: Understanding how much other institutions offer allows lenders to adjust their loan amounts to be more competitive.
- Interest rates: Comparing interest rates with competitors helps lenders calibrate their rates to attract more business.
- Loan term length: Knowing the term lengths offered by competitors can inform decisions on loan terms to make them more appealing.
- Average risk score: Determining the risk scores of loans booked elsewhere helps lenders optimize their policies to maximize earning potential without increasing default risk.
Making profitable decisions with business intelligence
Experian’s loan loss analysis solution, Ascend Intelligence Services™ Foresight, offers comprehensive insights to help lenders:
- Book more loans
- Increase profitability
- Enhance acquisition strategies
- Improve customer retention
- Optimize marketing spend
By determining where applicants ultimately book their loans, lenders can unlock deep insights into competitors’ loan characteristics, leading to more intelligent business decisions.
Read our latest e-book to discover how loan loss analysis can help you gain visibility into competitor offerings, improve your lending policies, book higher-performing loans, and minimize portfolio risk.
1 Bankrate, February 2025. Survey: Almost half of loan applicants have been denied over the past 12 months.
