Salad Money Credit Where Its Due Report WEB SINGLES - Flipbook - Page 9
EXCESSIVE GAMBLING /
VULNERABILITY
One of the key identifiers for
potential vulnerability is excessive
levels of gambling. Salad applies
a strict tolerance for gambling
within its pre-screening criteria. All
applications where the consumer
spends meaningful amounts on
gambling, frequently and over a
sustained period are declined.
This highlights that lenders which rely
solely upon CRA data to make their
lending decisions are not effectively
identifying potential vulnerability due
to excessive gambling.
It demonstrated that:
Using Open Banking is a superior way
of identifying and mitigating potential
customer vulnerability.
Part of the retrospective analysis
involved assessing whether credit
score/risk segment was an effective
measure of excessive gambling. It
revealed a weak correlation between
credit score and the likelihood for the
customer to be gambling excessively.
Please read our February 2023
paper, HARMFUL GAMBLING: Using
financial data to understand patterns
of problem gambling.
• Addictive and problem gambling
is increasing, is prevalent across
all demographics, and is not
being addressed by the gambling
industry.
• Gambling is common among
financially vulnerable people
seeking a loan.
• Worryingly many in the traditional
consumer credit industry are
making poor lending decisions for
vulnerable consumers.
UNDERSTANDING APPLICANT
DEBT: A COMPARISON BETWEEN
OPEN BANKING AND CRA DATA
A traditional CRA will (if its data
is accurate) show how much a
customer currently owes to other
creditors such as credit cards,
loans, car finance, and their
mortgage.
Some industry insiders have
expressed a concern that Open
Banking does not show the total
outstanding balance for each credit
account that the customer holds.
However, Open Banking allows
Salad to see exactly what credit
commitments the customer is
repaying each month and any
new loans taken out (which can be
identified via the loan credit being
paid into the customer’s bank
account). Open Banking also shows
credit commitments which are not
reported to CRAs (e.g. BNPL).
We compared the credit outgoings
data available using Open Banking
against the outstanding debt
information and monthly repayment
information returned by the CRA. The
data comparison revealed that:
• Open Banking offers a more
accurate assessment of the
customer’s credit commitments
compared to CRA data.
• Open Banking will cover any recent
credit taken out, which may not
yet be reported by the CRA, and
captures actual repayments being
made – with no issues on reporting
lags, or account types which are
not fully reported (such as Buy Now
Pay Later).
• For the lowest deciles, CRA data
is significantly underestimating
how much a customer owes / is
repaying.
Comparing the value of Credit Reference Agency data with Open Banking when serving financially excluded people
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