4 Types of Alternative Credit Data You Should Be Using Now

April 26, 2018 by Sacha Ricarte

Alternative credit data sources make it possible for lenders to gain a more holistic view of existing and potential client bases, enabling them to better determine the risk of lending to someone with little or no credit history.

These sources also can provide lenders with a competitive edge by preparing them to be better equipped to mitigate losses, expand their scope of potential applicants, give them another look at the creditworthiness of previously-denied applicants, and enable them to properly adjust credit terms and pricing to better speak to compatible consumers.

“Experian is a big supporter of the widespread reporting of alternative data—including, rental payments, utility payments and cellular telephone payments to name a few,” said Alex Lintner, president of Experian’s Consumer Information Services.

Here are four FCRA-compliant alternative credit data sources to consider when evaluating consumers for credit:

Alternative Financial Services: Alternative financial credit information, including payday and short-term installment loans and inquiries, on the majority of the United States’ subprime population.

Rental Data: RentBureau includes detailed, positive and negative rental payment history information on more than 18 million consumers in the United States.

Extended View Score: A risk model designed to evaluate the creditworthiness of thin-file and no-file consumers who have little to no traditional credit history.

Account Aggregation: Permissioned by the consumer, a real-time data collection of his/her financial accounts (bank, credit card, investment and business) in a single location to digitally verify income and assets.

Tapping into these resources can give deeper and richer results—improving overall data analytics and, subsequently, possibilities for future lending.