In July NestEgg hit an important milestone. Our decision engine has reviewed more than £100m of loan applications.
Representing just under 80,000 individual borrowers, 60,000 applicants were financially excluded. We estimate these borrowers saved £18m in excess interest that would have otherwise been paid to high cost lenders.
We’ve learnt a lot along the way.
The data behind the decision engine has taught us a lot. Because of this, we improve our software in areas that deliver the greatest benefit.
- Credit union members shouldn’t be judged by their credit score. They are half as likely to renege on a credit union loan than their credit score suggests. Lower income applicants can be marked down because of a missed payment or living in the wrong postcode. Perhaps a borrower has struggled with rolling voter registration and therefore isn’t on the electoral register. Credit scores can be lower for weekly paid workers, because they pay their loans back on a weekly basis.
- Because of this the NestEgg Decision Engine lets lenders choose their own credit score rules. With 10,000 loans being assessed every month –we’ve got plenty of data to help you decide when best to accept, decline or refer a loan based on credit score.
- Mobile phone defaults tend to be the outcome of consumer disputes. Most responsible lenders refer rather than decline applications where the main issue is a mobile phone default. That’s why the NestEgg decision engine enables a lender to highlight rather than decline smaller value defaults.~
- Creditors are more willing to pursue County judgments for smaller amounts. The average CCJ value has halved in the last 10 years. 50% of claims against applicants going through the decision engine were for less than £500. One in five were for between £500 and £1,000. This is why NestEgg enables you to refer rather than decline County Court Judgments is they’re under a certain value. If you only want to look back at the last 12 months or for the whole of the six-year credit history. It’s up to each lender.
And then, of course, there was the pandemic, This hit around 1/3 of credit union members badly. At the beginning of lockdown we saw credit unions helping the most vulnerable with £4 in every £10 lent going to people to meet Covid-19 related costs. To help credit unions continue lending we identified personas of borrowers less likely to be affected by Covid-19.
And now we do appear to be bouncing back. Credit unions using NestEgg’s decision engine saw almost a threefold increase in lending between May and July 2021 compared to the same period, last year. The decline rate is down 10% too. Additionally, average loan value is also up 10%. Credit scores have remained steady. Applicant income is up 6% in April 2021 compared to the previous year.
And opportunities abound.
Loans to pay off credit cards are less risky than wider consolidation lending. Members applying to pay off just one credit card had the second highest credit score of any loan type. NestEgg is introducing product specific decisioning strategies to better assess consolidation applications, for example by specifically looking at past credit card behaviours or previous consolidation loans.
Join us on the journey from £100m of loan applications to £1bn. Book a demo below. But don’t just take our word for it.
Find out how NestEgg supports Central Liverpool Credit Union so it can improve financial resilience across the City Region.