EFL proved the ability to reduce default rate by 50%
Equifax, the largest credit scoring firm in Latin America, saw many of its financial institution clients looking down-market to micro, small and medium enterprises (MSMEs) for growth. However, limited credit data in this segment made traditional credit scoring impossible, creating a barrier to growth both for Equifax and the clients it serves.
Equifax engaged EFL in a 12 month pilot to determine if EFL’s psychometric credit scoring methodology could enhance traditional credit scoring in the Peruvian market. Particularly, Equifax was interested in how layering psychometrics could enable increased lending and greater control over risk.
EFL and Equifax observed that layering psychometrics with traditional bureau data can allow financial institution to increase lending 140% while maintaining default rates, or reduce default rates by 50% while maintaining acceptance rates. Encouraged by these results, EFL and Equifax have partnered regionally to offer the expanded scoring solution market-wide.Download Full Case Study
* Default reduction refers to the impact of removing the bottom two quintiles of EFL scorers from the borrowing population