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Singer & Friedlander Finance warns dealers to be wary of automated scoring

Dealers are being warned they may be losing out on finance and car sales by only using finance providers who use automated credit scoring systems, according to Singer & Friedlander, the finance services group.

It believes more flexible credit assessment - where the agreement and buyer is assessed on their own merits - works more in favour of dealers' sales targets.

Dealer's profitability will be hit if a good customer is declined by a finance provider using automated credit scoring. Singer & Friedlander says this is the risk facing dealers who work with finance providers who only use automated scoring. Many potential buyers could fall through the net even though they are financially stable.

Miles Roberts, director of sales and marketing of Singer & Friedlander Finance says: "Because the way in which a credit scoring system works, dealers may find that potentially, some very good customers are declined finance. And any customer that is declined by one provider that credit scores, will be refused by all others that impose the same guidelines, ultimately leaving the dealer without a sale.

"For a finance house, losing deals that fall outside of its credit rating structure is not an issue. For a dealer, however, every deal is crucial to their bottom line profitability and will have a knock-on effect on customer loyalty.”

When it comes to assessing an individual's application, credit lenders will look at two areas: the applicant's credit history and his or her credit score. A poor credit history will certainly lead to a low credit score, but a clean credit history, or none at all, is no guarantee of a good credit score either.

Roberts says: "By only working with finance providers that impose strict credit scoring guidelines, dealers may be losing customers unnecessarily. Competition in the car market is strong and dealers need to work with finance houses that not only give them the best deal, but who also help them increase and keep their customer base."

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