Why Involve Humans in the Credit Decision?
Kevin F Clune, CLFP
“There will always be people involved.” according to Dave Schaefer, a market leader with over 30 years of experience in the commercial equipment finance and lease industry. Mr. Schaefer delivered his remarks at the 2015 annual AltLend Conference sponsored by Financial Research Associates.
The subject of his talk was “Automated Underwriting: Strengths & Weaknesses” which discussed how to achieve consistent lending practices in a digital age. With the development of scorecard decisioning systems that are available to lenders to assess a credit application, there was great interest in this topic and I thought it was worthy of some comments.
Instantaneous online credit decisions may be a priority and an expectation for some vendors and leasing customers. This process requires the applicant to provide information which either they or the lender can enter into a software program that can spit out a credit score. What could be the “weakness” of depending solely on a mechanized result?
While Clune & Company does access credit scores with the approval of our customers, we also incorporate a human touch. Each application is reviewed by a credit specialist. We feel that finding the optimal balance between the two can provide many benefits to all parties involved in a lease finance contract.
- Save time of vendors and lessees if the Credit Specialist does the data input.
- Alternative lease structures may be recommended.
- Payment terms might be modified.
- Unusual financial circumstances can be explained.
- A human relationship is built.
It was affirming to learn that Schaefer also advocated the use of an automated underwriting system to create consistency when assessing risk and other factors as long as there is still a human at the helm. “I like eyes on a deal.” he said. His suggestion was to “allow a human underwriter more concise parameters to review each request and to make the most accurate determinations possible”.
If you have any questions about our process, please contact us at your convenience. We might be the right “fit” for your business.
Kevin F. Clune, CLFP
Clune & Company
