Lenders need to widen customer pool, study suggests

A new study estimates that 17.3 million prospects for new mortgages are being overlooked by lenders. Many of these prospects hold little credit history and, therefore, may be viewed as a risk to some lenders in making a loan.

Experian, a credit analytics provider, notes that lenders will need to widen their market base if they are to grow their portfolios. That may require lenders to expand who they’re lending to, including finding creditworthy prospects who may have lower credit scores than the typical prime borrowers.

“Identifying near-prime borrowers is a trend in place for the last eight years, but lately there is a renewed focus as small- to medium-sized lenders get into the mortgage space more,” Michele Pearson, vice president of product management at Experian, told HousingWire. “We want to give those folks a chance to identify those borrowers.”

Otherwise, lenders may miss out on the potential to grow new mortgages at an estimated $3.86 billion, Experian estimated in a recent white paper.