Metrics Monthly | February 2020 | AU Edition

Creditworthiness and affordability: what exactly is the difference and how can OpenBankVision help companies make better credit decisions? Do you have a crystal ball?

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 overdrafts or credit cards). However, it’s down to the lender to decide how to check this, and they must make a reasonable assessment based on each individual case. Many companies have focussed on creditworthiness as, unsurprising-

ly, they want to try to ensure that they regain the money they have lent. Affordability, on the other hand, focusses on whether the consumer 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?

10 | Metrics Monthly

February 2020 | AU Edition

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