Modern Credit Scoring With Alternative Data

For the average American, building credit is, at least partially, a continually stressful and overwhelming experience. Many modern Americans use only cash and debit, or are recent immigrants, or are recent divorcees. These Americans, even while paying their bills consistently and operating completely responsibly, can have invisible credit profiles.

This is a problem. No credit score, or thin credit files, can lead to anything from shady lenders to terrible mortgage rates. Most Americans with low credit scores are struggling to get by, having to pay more for loans is simply crippling. Here is where modern AI powered alternative data can supplement typical credit analysis.

Alternative data, which relies on information like utility and telephone bills, helps to score the unscorable. Thin files are made more complete, increasing credit scores, and invisible files suddenly become visible. In practice this means 10 to 25 point increases, with no change on the side of the consumer. More importantly, it also means 6.5 million would move from unscorable to scorable. 

These are the positive changes being made around credit scores today. Alternative data, and more robust data, is helping a wider range of Americans to be recognized. The economy experiences ups and downs, but the average American deserves to be represented in any way possible.

Expanding Access to Credit with Alternative Data