![]() ![]() There is a large market of people needing to be served, mainly those who have been left out of the traditional financial system. Using these alternative data sources may give lenders a more robust picture of a borrower’s financial standing than a credit score alone.Įxtending credit to those with low - or no - credit scores - when done intelligently and with alternative data, opens up a new wave of potential borrowers and lending opportunities. For these individuals, alternative data might be the only way to gain access to loans. A lender might be unlikely to approve an applicant based on a credit score of 600 alone but on-time utilities payments may be good indicators of repayment likelihood and could potentially change that decision in the borrower’s favor.Īlternative data also comes into play with credit invisibles, or people lacking a credit report or credit score. Incorporating alternative data such as on-time utility payments can help reveal a more holistic picture of a borrower’s finances and help open new markets for lenders. If renters reliably pay utilities, they don’t always have the benefit of having that reflected in their credit scores. As card utilization rates and delinquencies increase, lenders need to leverage alternative data and different scoring methods to help identify new opportunities.įor example, in the U.S., 44 million households rent their homes. In fact, our recent data at Equifax shows that card utilization rates are increasing alongside increases in delinquency rates. ![]() ![]() Increasing inflation, rising interest rates and stagnant incomes have made borrowing more expensive and meeting financial commitments more difficult. ![]()
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