4/6/2024 0 Comments Equifax lifting freezeWe do not include the universe of companies or financial offers that may be available to you.īankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. But this compensation does not influence the information we publish, or the reviews that you see on this site. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. The offers that appear on this site are from companies that compensate us. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.īankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. Establishing a credit history and joining the financial mainstream could help individuals potentially qualify for a loan, providing an immense opportunity for inclusive lending.We are an independent, advertising-supported comparison service. This due diligence protects lenders from risk and safeguards borrowers from excessive debt.Īlternative data may open doors for individuals with limited or no credit history but stable incomes and on-time utilities payments. More complete view into risks: By utilizing alternative data, lenders can gain insights into risk factors that may not be evident in applicants with good credit histories, but who may have a history of late utilities payments. Real-time financial insights: Alternative data sources such as consistent on-time utilities payments can provide an up-to-date view of a borrower’s true financial health and habits. More approvals: Up to 15.5% more applications can be approved when alternative data is used in combinations with a traditional risk score while mitigating the amount of additional risk taken on. More applicants: 21% more applicants could be made scoreable when compared to a traditional credit score alone.īetter informed decision-making: Up to 10% KS lift when compared to a traditional score, enhancing the ability to identify high risk consumers who should be swapped out. They can also choose how much weight they want to give alternative credit data vs traditional credit report data-or even if they want to rely on alternative data alone.Īccording to ourresearch at Equifax, incorporating alternative data offers a range of valuable benefits: It’s possible to use a “ready-made” score that incorporates alternative data if the lender chooses to layer this into their process. To use alternative data, lenders must first obtain it, and then incorporate it into their models and loan-approval decision process. 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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