Traditional credit scoring methodologies haven’t kept pace with technological advancements—especially recent ones—that are helping rapidly revolutionize many industries. With traditional automotive credit programs having been built around the decades-old FICO system, your dealership and your customers often see deal-making opportunities negatively impacted by this outmoded approach to credit that is unable to accurately price a segment of deserving borrowers. At the core of Lendbuzz’s ability to offer attractive credit programs that outperform what FICO-based programs may offer, you’ll find our Artificial Intelligence Risk Analysis (AIRA) score, our proprietary methodology to judge the creditworthiness of applicants regardless of their FICO score (or whether they have one at all!)..
How Does AIRA Work?
AIRA uses the immense power of artificial intelligence and machine learning to analyze the thousands of data points found within a person’s income and spending patterns—together with other indicators of credit worthiness—to create a holistic picture of a potential borrower’s credit risk. That data is then combined with the specifics of the deal and compared against an ever-expanding data set drawn from Lendbuzz’s own loan portfolio.
To keep things consistent for credit and finance officers, Lendbuzz’s AIRA scores range from 300 to 850, like FICO, with lower scores indicating higher likelihood of default.
The Benefits of AIRA over Traditional Credit Scoring Methods
The terms of a typical auto loan offer are based on an individual’s FICO scores, which by definition means that applicants without a FICO score – something that is true for close to 50 million people living in the US who don’t have sufficient borrowing history – are unable to access accurately priced credit and must pay the price, literally, by being bucketed with higher risk applicants. This underserved audience is often broadly referred to as “credit invisibles” and the AIRA score, which uses easy-to-connect financial data in lieu of FICO to better price risk regardless of borrowing history, was designed ostensibly for them.
Most dealers end up handling credit invisibles in one of two ways: they “pre-judge” their creditworthiness, then turn them away early in the process, or they offer them a loan with punitive terms (and often for vehicles in subpar condition.) Neither of these options serves the needs of the dealer or car buyer in ways that are satisfactory or sustainable, but until AIRA was developed, they were usually the only choices available.
Lenduzz’s AIRA technology offers this audience (and the dealers selling to them) major advantages throughout the loan process. First, AIRA speeds up the overall process by taking data—like income and spending history—into account immediately once it has been provided, to increase decisioning certainty earlier in the application process. Second, AIRA’s ability to analyze a massive amount of data that legacy credit scoring methods ignore means it can expand a dealership’s pool of customers beyond what it would’ve typically been limited to with their existing financing options—either unable to finance the purchase at all, or have the terms be so punitive they can’t afford the vehicle they need.
AIRA Feeds on Financial Data
AIRA creates an overall risk profile by looking at multiple data factors including the applicant’s financial history, and the structure of the deal.
Financial history data (including income patterns and spending behavior) has material influence on the AIRA score, with this data provided by applicants connecting their bank accounts during the application process. The more and better income and spending sources an applicant can provide and connect, the better chance they’ll have at an increased AIRA score.
The deal details’ impact on the application’s overall risk profile is more fluid. Following is a list of variable that can reduce the overall risk profile of the deal, potentially improving AIRA:
- Collateral Quality
- Deal Structure Composition
- Monthly Payment and Term
- Application Completeness
While anything that decreases the deal’s risk factor can improve the AIRA score, improvements to it may be minimal or even negligible if the financial features considered by the model are highly unfavorable.
Putting AIRA to Work for your Dealership
Whether you’re a single-rooftop independent, work at a franchise store, or you’re running a major group, Lendbuzz’s AIRA technology is available to all qualified dealers.* As a Lendbuzz dealer, you’ll have access to our own simple and intuitive dealer portal, while our application process also easily integrates into your existing F&I workflows through the credit apps like Dealertrack and RouteOne. In addition to helping expand the audiences dealerships can sell cars to, Lendbuzz dealers also get paid fast; we run two outgoing wire batches per day, giving us multiple opportunities to ensure prompt and convenient loan disbursements. If you’re interested in becoming a Lendbuzz dealer, please reach out to set up a conversation with one of our sales representatives.
Learn more about Lendbuzz today.
*We operate in many states and are actively expanding to new ones! We do not currently offer loans in the states of Alabama, Alaska, Delaware, Hawaii, Idaho, Kentucky, Louisiana, Minnesota, Mississippi, Montana, Nevada, North Dakota, Oklahoma, Rhode Island, South Dakota, Vermont, West Virginia, Washington D.C., and Wyoming.
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