Truck Lenders Must Look Beyond Credit Scores to Find Strong Operators, Analyst Says – Equipment Finance News
As seen in Equipment Finance News
By: Quinn Conoghue
Truck lenders need to rethink how they evaluate borrowers if they want to succeed in today’s challenging transportation finance environment, according to industry analysts.
With overcapacity and ongoing credit pressures squeezing the trucking market, many lenders are pulling back to limit risk. Recent months have seen a rise in freight carrier bankruptcies, underscoring the difficult conditions facing both operators and the financial institutions that support them.
Analysts say the issue is not just market volatility, but also how lenders assess creditworthiness. Dean Croke, principal analyst at DAT Freight and Analytics, says many lenders focus on the wrong factors when underwriting truck loans.
Traditional credit scorecards and financial statements often fail to tell the full story of an operator’s ability to succeed and repay a loan. Instead, Croke believes lenders should place greater emphasis on real world indicators, including how trucks are maintained and how equipment is operated day to day.
According to Croke, the condition and care of equipment can reveal more about an operator’s discipline and long term viability than a balance sheet alone. He suggests that operational habits often provide clearer insight into repayment ability than what is captured on a standard application.
Asking the Right Questions
Some lenders are already taking a more nuanced approach. Chris Grivas, president of CAG Truck Capital, says many financing companies rely heavily on credit history and time in business during preapproval, but those metrics do not always reflect an applicant’s experience, resilience, or understanding of the trucking industry.
Instead, CAG Truck Capital asks questions designed to uncover an applicant’s background and connection to trucking. These include how long they have worked in the industry, how they learned about the lender, and whether they have family or close ties to trucking. The goal is to understand whether the borrower truly knows the business or is simply entering it without preparation.
Grivas says this approach often identifies strong owner operators who may not have perfect credit but possess the operational knowledge needed to run a successful trucking business. In many cases, a borrower with a lower credit score but years of hands on experience can be a better risk than someone with an excellent credit profile but limited industry exposure.
He also notes that high credit scores can sometimes reflect responsible consumer borrowing, such as paying retail or personal credit cards on time, without demonstrating the ability to manage the demands of a commercial trucking operation.
Flexible Terms for the Right Borrowers
Lenders who take a deeper look at operator quality may also be better positioned to offer more flexible financing terms. Borrowers who demonstrate strong operational experience and equipment discipline may qualify for lower down payments or longer repayment periods, even in a tight credit environment.
As trucking market pressures persist, lenders that move beyond surface level metrics and focus on how operators actually run their businesses may be better equipped to identify strong borrowers, manage risk, and support long term success across the industry.
