Drivers with bad credit history know how difficult it is to get a loan with favorable terms, but such consumers may be pleased to know that the credit market has recently started to expand again following the financial crisis. Not only is credit being loosened, but many lenders are starting to look beyond credit scores to gauge a consumer’s risk of defaulting.
According to the New York Times, some lenders will now look at other indicators of spending and saving behavior beyond the credit score to evaluate potential clients. Being registered on a job search website, for example, may reportedly make a consumer appear less risky.
Using such indicators, lenders have reportedly coined new terms for various types of borrowers. “Strategic defaulters” have bad credit history because they walked away from the mortgage on a dramatically devalued home and “first time defaulters” had good credit histories prior to the recession, at which point they ran into trouble.
These two categories are reportedly looked relatively favorably by lenders, even if the consumers carrying the labels have low credit scores. This may be good news for responsible consumers currently looking for a car loan or another type of financing.