Ford Motor Company (NYSE:F) is planning to use machine learning to help it approve more loans.
Ford Motor Credit Company, the financial business for the company, has completed a study with ZestFinance concerning the machine learning method of lending. The company notes that this process will make it easier to lend to those with limited credit histories.
Ford says that this method will also still offer better risk protection while lending to people with lower credit scores. This is possible due to the machine learning, which can make a more in-depth analysis of person’s likelihood of paying back a loan.
“For this study, we worked with ZestFinance to harness the capability of machine learning to analyze more data and to analyze our data differently,” Ford Credit Chairman and CEO Joy Falotico said in a statement. “The study showed improved predictive power, which holds promise for more approvals, enhanced customer experiences and even stronger business performance, including lower credit losses.”
Ford notes that these new lending methods will allow it to more easily target two categories of people that want to buy cars: Millennials and those with low credit scores. The company also says that roughly 26 million Americans have no credit record, which could get in the way of obtaining a loan for a car.
Ford’s effort to expand its lending to more customers comes as the company faces a decline in sales in 2017. The company’s sales in the United States are down by 4.3% and the auto industry is also dealing with a decline. This has new car sales down by 2.8% in the U.S, reports Fox Business Network.
As of this writing, William White did not hold a position in any of the aforementioned securities.