--- title: Are You Really Scoring for Ability to Pay and Risk in Today’s Environment? description: Reach out to discuss how we can help account and model for these and all variables in today’s Auto Finance environment. image: https://trustscience.com/hubfs/2025%20Brand%20Assets/Blog%20banner%20placeholder.png --- [![Trust Science Logo (Menubar)](https://trustscience.com/hubfs/Trust%20Science%20Logo%20(Menubar).jpg)](https://trustscience.com) - Solutions - [Credit Bureau+™](https://trustscience.com/credit-bureau) - [T°Score™](https://trustscience.com/t-score) - [CashFlow+™](https://trustscience.com/cashflow) - [Services](https://trustscience.com/services) - Industries - [Auto Lenders](https://trustscience.com/auto-lenders) - [Installment & Single Repayment Lenders](https://trustscience.com/installment-single-repayment-models) - Company - [About Us](https://trustscience.com/about) - [Our Team](https://trustscience.com/team) - [Press Releases](https://trustscience.com/blog/tag/press-releases) - [Careers & Culture](https://trustscience.com/careers) - [Patents](https://trustscience.com/technology-patents) - [Resources](https://trustscience.com/resources) - [Marketing Channel Partners](https://trustscience.com/partners) - [News & Blog](https://trustscience.com/blog) - [Events](https://trustscience.com/events) - [Gartner Research](https://trustscience.com/resources/gartner-research-mentions) - Support - [Consumer Disclosure](https://trustscience.com/legal/consumer) - [Consumer Resources](https://trustscience.com/legal/help-page) [CONTACT US](https://trustscience.com/contact) [REQUEST A DEMO](https://trustscience.com/demo) Blog Archive # Are You Really Scoring for Ability to Pay and Risk in Today’s Environment? Reach out to discuss how we can help account and model for these and all variables in today’s Auto Finance environment. [Trust Science](https://trustscience.com/blog/author/trust-science) Jun 2, 2021 ***Disclaimer**: Thank you for reading. The content you are currently viewing is archived material and may be outdated. We strive to provide accurate and up-to-date information, but please be aware that the content in our archives may no longer reflect the latest developments, events, or changes in our field.* After Sub-Prime Auto and Leasing were obliterated during the “Great Recession”, various data points the Auto Finance eco-system relies on went through various ups & downs before things are “Normalized”. Today is quite different, with many more variables available to reach your goals accurately, competitively, and safely in Auto lending. Since GM & Ford first introduced Auto Loans & “Payment Plans” in the 1910s, decisioning has been all about the borrower’s Payment History & Ability to Pay. This has essentially remained to same for over 100 years. Today, for all Auto Lenders, that’s simply not enough. Fortunately, a true AI/ML Platform, like **Trust Science’s Decision Management Suite**, is capable of providing, synthesizing and solving for all additional data points affecting Risk, in a dynamic environment, constantly refining focus toward achieving your objectives. Employment continues to experience unprecedented churn, tumbling Income & Tenure model reliability. These are other elements that have a profound effect, which **Trust Science** has been helping lenders block & tackle to lift performance & better gauge default probability. ## **States Extending Credit Reporting Restrictions Till August 31, 2021:** These extensions will now make it **18 months** that Bureaus have been blinded by these restrictions. This has been hindering **predictability**, while artificially raising **Credit Scores**: *“Prohibits lenders from negative credit reporting to any credit reporting agency based on (i) a stay of any mortgage foreclosure proceedings, tax foreclosure proceedings or tax lien sales; or (ii) mortgage arrears during the COVID-19 period with respect to an owner who has filed a Hardship Declaration with the lender.”* ## **Record High Used Car Prices & Value Retention:** In **Black Book’s Weekly Used Car Indexes** we see how Wholesale Used Car prices have exploded beyond the recession recovery in 2009 and certainly above the initial rates in Q3 & Q4 2020 when retail sales initially reopened. Remaining COVID pent-up demand, **HUGE** fleet replenishment by Rent-A-Car firms, as travel picks up, and New Car chip supply struggles are the key drivers. For lenders, caution should be taken as **LTV**, already an area of lender distinction, may pressure collateral risk valuations in later loan years as this dynamic will subside. The good news is, the **Black Book Retention Index** is at an all-time high. In a recent article In **BHPH Dealer** I pointed out, due to a very substantial reduction in driving over the COVID pandemic, and permanent options to “work from home”, collateral risk is being mitigated. The numbers are bearing it out, and much of which will remain going forward. ## **Consumers Feeling the Pinch:** Notwithstanding continued low finance rates, the slowed rate of driving, and depreciation, **Average Fuel Prices** have eclipsed **$3.00 Per/Gal** Nationally, with some expecting it to near **$3.50** as the Summer driving season arrives. This is a key driver of the entire **Consumer Price Index** but has direct implications to your borrower’s **Ability to Pay**. Considerations can, and should, be made to account for this dynamic. The spillover effect of fuel prices into everything we buy, along with spikes in demand for multiple segments of the economy, caused a sharper than expected **4.2%** leap in the **Inflation Rate**, with a **.08%** jump in the **CPI**. Simply put, consumers monthly spend is beginning to be squeezed. ## **Rising Fraud Rates:** **Fraud** in Auto lending has risen again in 2020 to about **$7.3 Billion**. Following is a chart from Equifax demonstrating the ripple effects of fraudulent activity, transcending the conventional concerns of **ID, Income, & Employment** verification. As highlighted, **Loan & Lease Fraud** increasing by **37.2%** is alarming, however, other sectors lenders rely on to assess borrower risk are being **VERY** clouded also. **“Other Identity Theft” ID Theft & Synthetic Fraud**, up **37.9%** bears attention. **Phone & Utility Fraud** being up **28.9%** and **Banking Fraud** up **134%** certainly cause concern on multiple verification points relied on in Auto Finance. Clearly what jumps out the most is the overwhelming amount of **“Government Document & Benefits Fraud”.** Here is why; estimates run the gamut to as high as **OVER $100 BILLION** that has been dispersed to fraudulent SBA, Stimulus, and Unemployment benefit recipients. These dollars have added **Down Payments** that would not have been, and a false sense of security in the borrower’s **Ability to Pay**. This will fade, if not clawed back by authorities, manifesting the true risk of the borrower, when it’s too late. Reach out to discuss how we can help account and model for these and all variables in today’s Auto Finance environment. [Blog Archive](https://trustscience.com/blog/tag/blog-archive) ## Similar posts Press Releases ### [Trust Science® Submission to U.S. Regulatory Agencies: Comments on Financial Institutions’ Use of AI/ML](https://trustscience.com/blog/trust-science-submission-to-u.s.-regulatory-agencies-comments-on-financial-institutions-use-of-ai/ml) Trust Science® has submitted information and comments on “Financial Institutions’ Use of Artificial Intelligence” Trust Science Sep 1, 2021 Blog Archive ### [How Can AI Access and Harness Your Data](https://trustscience.com/blog/how-can-ai-access-and-harness-your-data) Unlock financial inclusivity with AI-driven credit scoring. Explore how alternative data creates accurate, fair assessments for underserved borrowers. Trust Science Sep 22, 2022 Blog Archive ### [Holiday Inflation: Food, Gifts, and Vacations Costing 13% More in 2022](https://trustscience.com/blog/holiday-inflation-2022) Explore 2022's holiday inflation trends with food, gifts, and vacations costing 13% more. Uncover its impact on families and financial struggles... 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