LexisNexis Risk Solutions and Equifax spent more than two years working on a solution sought by the auto finance industry; a tool one of the lead managers in development told SubPrime Auto Finance News is the answer to several requests on how to leverage alternative data more effectively and efficiently.

On Tuesday, the companies launched PowerView Score, a new, three-digit credit score tailored specifically for use in the vehicle finance space. The new scoring leverages alternative data sources, including telecommunications and utility payment history from Equifax and public records information from LexisNexis, to help finance companies identify creditworthy vehicle buyers.

Ankush Tewari, senior director of credit risk decisioning at LexisNexis Risk Solutions, explained both companies saw a market need, articulating what finance companies sought.

“They need the score to be more predicative in what they’re doing today. They need better coverage of thin files and no files. They really needed the products to be easily integrated into existing decisioning systems,” Tewari said.

“Companies don’t necessarily want to do a whole huge build-out to ingest a new score. They would like it to fit in with what they’re already doing today,” he continued.

“They were looking for a solution that can be backed by the stability of two of the largest data players in the industry with LexisNexis Risk Solutions and Equifax,” Tewari went on to say.

The new alliance between LexisNexis and Equifax allows auto finance companies to have one-stop access to the power of Equifax’s National Consumer Telecom and Utilities Exchange (NCTUE) and traditional credit bureau data partnered with LexisNexis Risk Solutions decisioning data.

The companies highlighted that combining this data to construct the PowerView Score has demonstrated a strong ability to be highly predictive and allows for improved risk models that can be used to support credit analysis of applicants from prime through subprime.

In back-testing, the companies indicated the new scoring showed significant improvement in model performance across portfolios.

“This score presents a growth opportunity to prime and nonprime lenders who want to auto decision more customers or may be considering expanding their criteria to address a broader market,” Equifax auto finance leader Lou Loquasto said in a press release about the solution.

“The alternative data capabilities of LexisNexis Risk Solutions merge perfectly with Equifax’s robust telecom and bureau data offerings to create an industry leading risk solution for auto lenders, while helping them to make more informed decisions,” Loquasto added.

Tewari elaborated about how the reading PowerView Score can generate is different from other tools that might be available and why it’s so specific for vehicle financing.

“If you’re familiar with how credit scores are built, generic scores are built on generic consumer samples that cover all different types of loans,” he said. “This score was built on a sample that was specifically auto industry focused. No other type of data was used other than auto loan data to develop the score.

“We had experts from both sides who are experts in the auto lending industry provide input on how the score should be constructed, what the goals should be. There was a lot of industry expertise from both sides that brought the score together,” Tewari continued. “The key was building it on an industry specific example of records.”

The industry creditability both LexisNexis and Equifax possess also influenced why the two companies collaborated, according to Tewari.

“We had really good collaboration starting with the business leadership and that propagated down to the product teams, teams of statisticians from both companies working together. It’s really been just a process of getting the score built, coded up and ready to go. There really haven’t been any obstacles per se,” Tewari said.

“To have a company as well known and stable as Equifax with complementary data assets like the NCTUE, that was really critical to all of this,” he continued. “The alternative data space is rather relatively new compared to traditional credit bureau data. Having large companies with well-known brand names contributing assets to a score that is jointly brought to market provides signals that this a product that is legitimate, predictive and better than other solutions out there in the market and that lenders should be at least interested in testing it.”