Signs of mortgage troubles have always been a red flag for lenders making consumer credit decisions
. However, a trend is emerging in the auto financing industry in which lenders are sifting through loan applications by delinquent or sub-prime borrowers to gauge their credit health. Companies such as Ally Financial, General Motors and Mitsubishi are weighing these sub-standard credit applicants to determine which borrowers with compromised mortgage-payment histories are likely to be good risks. "After the financial crisis forced many lenders to dial back their risk, they were chasing after the same small group of borrowers with sterling credit, many of whom don't want to take on more debt," reports Ruth Simon for The Wall Street Journal. "To expand, lenders must find ways to make sound loans to a broader set of borrowers. " According to a report by Equifax and Moody's Analytics, more than 6.7 million borrowers have been at least 90 days past due on their mortgage during the last six years. The trend alludes to the importance of consumer credit risk management
in weighing such decisions, especially as lenders begin to accept greater risk.