#1 Have you got a crystal ball? Our February issue saw Head of Operations Paul Brown contemplate how lenders might be able to make lending decisions without the ability to see into an applicant’s future. The article discussed the fundamental differences between creditworthi- ness and affordability, before con- sidering how lenders might be able to paint the best picture of their applicants in order to accurately determine whether they will be able to pay back a loan. Creditworthiness and affordability: what exactly is the difference and how can OpenBankVision help companies make better credit decisions? To answer this question, it is first important to understand the differ- ence between creditworthiness and affordability. The FCA classify these as two very separate things. Creditworthiness is defined as a consumer’s ability to make repayments as they fall due (or within a reasonable period in the case of open-ended credit such as over- drafts or credit cards). However, it’s down to the lender to decide how to check this, and they must make a rea- sonable assessment based on each
individual case. Many companies have focussed on creditworthiness as, unsurprisingly, they want to try to ensure that they regain the money they have lent. Affordability, on the other hand, focusses on whether the consum-
er can actually afford to take out the loan in the long run. But does this mean that the lender needs to be able to see into the consumer’s future?
Click here to view the full article in our February issue of Metrics Monthly.
We hope you’ve enjoyed reading Metrics Monthly over the past year and look forward to bringing you more valuable insights, industry news and company highlights in future issues.
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