FactorTrust tool offers real-time reporting on underbanked consumers


As part of its continued commitment to the needs of buy-here, pay-here dealers, short-term lenders and the alternative financial services industry, FactorTrust recently announced a tool called FlexFormat; what the company contends is the first industry standard in reporting short-term loan data for products focused on underbanked consumers.

FactorTrust classifies the underbanked typically as consumers with traditional credit scores under 700.

While Metro 2 is the industry standard for traditional credit bureaus, it provides an electronic data reporting format more suitable for prime loans, lacking a sufficient data reporting structure for information like loans with terms less than one month. FlexFormat fills this void. It can provide a single format designed around the needs of short-term lenders, while also enabling Metro 2 standardized reporting. FlexFormat’s process allows customers to submit data to FactorTrust at no cost, which then maps and translates the data into Metro 2 format, allowing the data to be passed on to traditional credit bureaus.

FactorTrust vice president of auto finance Scott Brackin elaborated about how this tool can help BHPH dealerships.

The FlexFormat will enable buy-here, pay-here operators the ability to report more accurately. BHPH customers and the reporting needs of associated loans are very similar to the loan information that FactorTrust has been collecting in the short term loan space,” Brackin said in a message to BHPH Report.

“FactorTrust has heard from many operators, along with dealer management system providers, that stuffing a BHPH loan into Metro 2 is very cumbersome as each of the big 3 have different requirements and standards,” he continued.

“Additionally, BHPH operators can feel safe in reporting their data to FactorTrust without the fear of another alternative credit union ‘poaching’ their customers,” Brackin went on to say. “We feel that the BHPH marketplace is lacking a database that maintains the reporting history for consumers that deal in the BHPH space. 

“By opening this up to the BHPH marketplace, we are creating an opportunity for operators to make the needed judgement calls on an applicant by checking out how those consumers are paying other operators,” he added.

FlexFormat also includes additional loan types that Metro 2 doesn’t support, providing better monitoring, quality assurance and data accuracy. This leads to higher and more complete data quality for these additional loan types, and addresses loan-stacking concerns.

FlexFormat fills a market need that has been missing until now, including convenient, single-format reporting where lenders only report credit history information once.

The company went on to mention FlexFormat has a simple XML reporting process, driven by events within the lender’s loan management system, such as:

—Number and value of new and open loans

—Last payment amounts and dates of made and missed payments

—Mapping and translation of data into Metro 2 format

—Real-time reporting that eliminates lag time between reporting cycles, enhancing accuracy

—Secure SSL encryption, ensuring highest industry standards in data security

—Flexible options in reporting only new loan inquiries, or all loan data

With FlexFormat’s high quality data reporting capability, lenders and providers more accurately assess risk and make faster decisions on consumers’ likelihood to repay loans. FlexFormat provides a complete overview of consumers’ creditworthiness, so consumers can get the credit they deserve and can afford. Since its inception, FactorTrust has processed more than 250 million records in real-time.

FactorTrust chief executive officer Greg Rable said the company is uniquely qualified to bring FlexFormat to the market due to its experience working with both Metro 2 and short-term lending data. This proprietary format is founded on FactorTrust’s expertise in working with data reporting of short-term and non-prime loans.

“Because Metro 2 cannot support reporting of alternative loans for underbanked consumers, we developed FlexFormat to provide an industry standard and process that has gone unmet by the Big 3 bureaus,” Rable said. “This benefits not only the lenders who have asked for a one-to-many reporting format, but also the consumers who have been, until now, widely unrepresented by the Big 3 bureaus.

“FlexFormat easily configures and maps customers’ data in a way that is digestible by the Big 3 bureaus,” Rable added.