A self-employed tradesman with a spotty credit history needs a loan to buy a new truck for his business.
The loan application could easily get rejected if his basic credit history is fed into a standard automatic loan decision-making system.
But proprietary software from Monetrics Inc. examines circumstances that less refined systems might miss.
For instance, that tradesman, while having credit problems in some areas, might have a history of conscientiously paying off vehicle loans. And if he depends on a vehicle for his livelihood, it's likely he'll avoid getting into arrears there.
“If I'm a lender considering a car loan, I want to see how someone performs as a car loan borrower, not necessarily across the board,” says J.B. Nayduch, Monetrics' founder and director of sales and marketing. “If they have credit card payment problems, that might not matter to me.
“We strip out the other factors. The guy might not get a loan at 5.9% interest, but he could get the deal, and it would likely be a solid loan.”
Conversely, a would-be borrower may appear a good bet on the surface with a high credit score in the 700 range.
“If that's all the lender looks at, they'll probably approve it,” says Nayduch. “But what if he has 70 cents of every dollar going to bills?”
Traditional automatic systems with limitations and lack of nuances often can't make such distinctions. But Monetrics can, because of its flexibility and depth, contends Nayduch.
It automates the entire decision-making process beyond the traditional A-D credit rating, says Peter Margaros, vice president of marketing.
“We can auto-decision approvals, declines, credit tiers, rates, advances and stipulations — something never accomplished in the automotive finance application process,” says Margaros, a 25-year veteran of software development.
The system can be customized to replicate individual lenders' decision policies and practices. It can supplement an existing scorecard system or stand alone, says Nayduch, a former high school teacher.
At times, special circumstances require a manual loan application review. But Margaros says Monetrics' patent-pending technology can automatically decide about 70% of applications for prime and sub-prime loans on new and used cars.
Based in Beverly, MA, Monetrics is seeking clients among automotive lenders and underwriters. It signed up its first client, a Midwestern bank. A second client is in the works.