Enhancing Affordability Assessments in Lending

This guide outlines the importance of improving affordability assessments in the lending industry, particularly in light of recent economic challenges and regulatory changes. It discusses the need for lenders to adopt enriched data methods to better understand borrowers' financial situations, moving beyond traditional credit reports and national averages. The document highlights findings from surveys conducted in the UK, France, and Germany, revealing that a significant percentage of borrowers face difficulties in repaying loans. It emphasizes the necessity for lenders to enhance their risk decisioning models and the role of new regulations, such as the Consumer Credit Directive 2 (CCD2) and the Financial Conduct Authority’s Consumer Duty, in shaping these assessments. The guide also details how digital tools like Tink’s Income Check can streamline the verification process and improve the accuracy of lending decisions, ultimately leading to more responsible lending practices.