Credit seekers to face psychometric tests

THOSE looking for credit next year should prepare to undergo psychometric testing.

South African credit bureau, Compuscan together with Coremetrix, a UKbased company will provide credit and financial service providers, insurance companies and risk managers with an alternative means of assessing consumers’ creditworthiness, through psychometric testing.

Jacobus Eksteen, senior data analyst at Compuscan said: “The implementation of this testing will open the door to credit for more consumers, enabling them to build a better credit record.

“However, affordability tests will still play an essential role in the granting of credit. There are many individuals who do not qualify for credit as they have no credit history.

“The test will empower some of them to illustrate that they should not be viewed as having high risk.” This method is being used in the UK, Poland, Turkey and Russia.

It will be implemented in South Africa next year.

Economist Azar Jammine welcomed the development but said it should not be used as a “be all and end all” measurement for risk assessment.

“Theoretically this could be very useful, but practically the system could be abused and it therefore should be used as one of many tests.”

The psychometric tests will be conducted after the standard affordability test and consumers will be required to answer questions related to how they handle different situations, brand associations, interests, means of transport and their outlook on life.

Those applying for loans with online credit providers, life insurers or retailers could be taking psychometric tests either on their mobile devices or online.

Eksteen said the tests could enable previously high-risk consumers to qualify based on positive test results, while Jammine said less people could qualify.

Jammine said it could negatively impact retailers but in the long-term could create a more sustainable environment for consumer spending.