Psychographic analysis involves the study of how people live, what interests them and what they like, according to the American Marketing Association.

Equifax auto lending sales leader Craig Sims acknowledged finance companies are leveraging psychographic personas in order to target specific consumers with appropriate offers to use on their next vehicle purchase. But when it comes to using psychographic information during the underwriting process, Sims explained most finance companies are stopping short of making it an integral cog of their scorecards.

At least for now.

“My understanding of psychographics is that it’s different from the traditional demographics, who you are, where you live and where you work, but instead looks to quantify why you do the things you do, your attitudes and opinions and values,” Sims said during a recent phone conversation with SubPrime Auto Finance News.

“The place we seeing it show up most of the time in auto finance is really on the marketing side of things as we look at who they’re targeting for a particular product,” he continued. “I think it’s becoming increasingly relevant in auto finance as we seek to understand who folks are and what their attitudes are about things like their car payment.”

And where that attitude could surface is through a consumer’s activity on social media sites such as Twitter or Facebook. But Sims noted a place where it might even more relevant — and verifiable — is when the applicant states income and employment information.

Whether potential deception is intentional or not, Sims mentioned that how close to accurate that income and employment information is that the consumer shares could be a predictor of repayment.

“I think auto lenders are beginning to dabble in it a little bit,” Sims said. “Where you work and how much money, you make might fall into that more demographic type that we’re used to looking at from an auto perspective. But one of the things we find out is people who overstate their income on an application turn out to be higher risk. What does that also tell you about their behavior and attitudes?

“We’ve certainly seen some anecdotal studies that people who either overstate their income or overstate their tenure are higher risk compared to people who are truthful about these pieces of information,” he continued.

Sims indicated that Equifax’s volume of business involving income and employment verification is up by 24 percent since 2015. And the 2017 pace is on track for 32 percent growth.

But while income figures might be hard data finance companies can verify and use, Twitter hashtag frequency doesn’t exactly fall into current regulatory categories established by federal agencies.

“Particularly given the regulatory era we live in, folks tend to be pretty conservative when bringing these new data elements in,” Sims said. “The jury is still out on whether it’s going to lead to fair lending concerns and things like that. Who knows what happens if you were to look at someone’s Twitter feed and considering that as a part of the underwriting decision? Folks seem to be sticking with the more traditional demographic data points. But these behavioral indicators could show if people are being truthful on the application.

“Some of these things that you might consider psychographic are details that lenders in the underwriting space have been doing for a long time,” he went on to say. “They look at someone’s bureau and the resident history and employment history and try to formulate a picture of how this person behaves and how they might continue to behave in the future.”

No matter what data and information finance companies leverage, speed to a decision is paramount, according to Sims, especially with consumers want to complete delivery as quickly as possible.

“We hear this recurring theme from lenders and dealers that decision time is a key metric for everybody because we’re trying to streamline the process, get customers in and out the door in an hour or less,” Sims said. “The more pieces of data and the less human intervention we need in underwriting, the quicker you can turn around and hopefully more painless for the consumer.”

While the industry might not be there yet, more frequent use psychographic analysis beyond marketing campaigns could land in underwriting and originations.

“Lenders are looking for how to paint this whole picture of this consumer,” Sims said. “How can I get past just the credit bureau to really understand how someone will behave if you were to extend that auto loan? It’s just a question of how confident are they that the things they’re looking at aren’t going to run afoul with the regulators.”