Salad Money Credit Where Its Due Report WEB SINGLES - Flipbook - Page 5
WHY WE UNDERTOOK
A RETROSPECTIVE
ANALYSIS
Challenged ‘what value would CRA data have,
over and above that of Open Banking?’ we
investigated – and were shocked
Salad Money is a social enterprise
specialising in affordable credit
for NHS and public sector workers.
Salad launched in 2019 to address
a severe lack of affordable credit
for people with impaired, poor or
thin credit scores and the millions
of credit invisibles. Our mission is
to develop a sustainable mid-cost
credit market and give borrowers
an alternative to high-cost lending.
We lend up to £1,500 over 12
to 24 months. To do so we use
Open Banking data and our own
proprietary credit decisioning
software for affordability
assessments, rather than credit
scoring.
Open Banking gives us visibility
of all key determinants for a
comprehensive assessment of
creditworthiness and affordability,
including income from employment
and from benefit payments; all
current credit repayment liabilities;
regular non-discretionary expenses
such as housing, utilities and
groceries; current and historic
difficulties with credit; signs of
financial stress and signs of
vulnerability. We see at least twelve
months of data so we can assess
applicants’ financial trajectory and
any changes.
To date, we have lent more than £4m
to more than 3,100 customers with no
credit score and who would otherwise
be excluded by lenders which rely on
CRA data (we’ve lent more than £40m
through over 46,000 loans in total,
to more than 13,000 NHS employees
and over 18,000 other key workers in
the public sector).
We have saved customers (46%
of whom have children in their
households) millions of pounds in
interest compared with borrowing
from the only alternative providers
available to them.
Beyond lending, Salad’s free financial
support tool, Salad Money Mind, helps
Salad applicants (not only customers)
build financial resilience.
As part of this review, Salad
attempted to address three
key areas:
1. What can CRA data tell us
about our customers that
we don’t already know?
2. What impact would
CRA data have on our
underwriting process?
3. Would CRA data improve
our decision-making
capability sufficiently to
justify using it?
Our retrospective analysis
covered 50,000 loan records
as described on page 6.
In 2022, Salad was challenged to
understand what value CRA data
would have, over and above that of
Open Banking. Salad engaged with
one of the UK’s three main credit
reference agencies to complete a
retrospective analytical exercise,
which would provide Salad with a
copy of the customer’s credit file at
the point they applied for a loan.
Comparing the value of Credit Reference Agency data with Open Banking when serving financially excluded people
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