"The deal depends on how the credit score for a particular customer is built. If it is ranking purely on risk, dealers could be losing out,” says Peter Carragher, sales director for Carlyle Finance.
He believes that more flexible credit assessment, where the agreement and buyer is assessed on their own merits, works more in favour of dealers’ sales targets.
"On a local basis, with knowledge of the area, dealer and stock, you can make an informed decision rather than looking merely at the hard facts," he says.
With an automated system, many potential buyers could fall through the net even though they are financially stable. But Carragher does advocate larger volume dealerships using automated systems, as long as they then follow up on those that are declined credit.
"An automated system is a good way of initially sorting the ‘yes’ and the ‘no’ answers, but then it is a case of going through the negatives, looking at each individual one and putting the work in on them," he says.
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 obviously lead to a low credit score. However, a clean credit history, or none at all, is no guarantee of a good credit score either.