2020 State of Alternative Credit Data

September 17, 2020 by Laura Burrows

Big data is bringing changes to the way credit scores are reported and making it easier for lenders to find creditworthy consumers, and for consumers to qualify for the financing they need. Since last year’s annual report, alternative credit data1 has continued to gain in popularity. In Experian’s latest 2020 State of Alternative Credit Data report, we take a closer look at why alternative credit data is supplemental and essential to consumer lending and how it’s being adopted by both consumers and financial institutions.

While the topic of alternative credit data has become more well known, its capabilities and benefits are still not widely discussed. For instance, did you know that …

  • 89% of lenders agree that alternative credit data allows them to extend credit to more consumers.
  • 96% of lenders agree that in times of economic stress, alternative credit data allows them to more closely evaluate consumer’s creditworthiness and reduce their credit risk exposure.
  • 3 out of 4 consumers believe they are a better borrower than their credit score represents.

Not only do consumers believe they’re more financially astute than their credit score depicts – but they’re happy to prove it, with 80% saying they would share various types of financial information with lenders if it meant increased chances for approval or improved interest rates. This year’s report provides a deeper look into lenders’ and consumers’ perceptions of alternative credit data, as well as an overview of the regulatory landscape and how alternative credit data is being used across the lending marketplace.

Lenders who incorporate alternative credit data and machine learning techniques into their current processes can harness the data to unlock their portfolio’s growth potential, make smarter lending decisions and mitigate risk. Learn more in the 2020 State of Alternative Credit Data white paper.

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