ICYMI: How TU is Using Data to Expand Financial Inclusion

At a recent U.S. Chamber of Commerce event, TransUnion’s CEO Chris Cartwright spoke to David Hirschmann, President and CEO of the Center for Capital Markets Competitiveness about how data can be used to expand access to credit and create a more financially inclusive world.

An absence of data causes the credit reporting ecosystem to miss out on a full picture of consumers. This disproportionally affects consumers from disadvantaged populations who lack access to credit, including veterans or immigrants, as well as younger consumers who are just starting to build their credit profile. Forty-five million Americans are not in the formal credit system, according to TransUnion.

Cartwright shared how TransUnion is looking to bridge these gaps and use data to pioneer innovative ways to give more people access to credit:

1. TransUnion supports using “alternative data,” such as rent, utilities, telecommunication and subscription payments, to help score more consumers. “Often times for younger consumers, or non-homeowners, their monthly rent is the largest bill that they pay — and they pay it consistently,” Cartwright said. “If we can gain access to that information at scale, we could score millions, if not tens of millions, of more Americans and enable them to access mainstream consumer credit.
2. TransUnion is also looking to include “buy now, pay later” (BNPL) payments in credit records. BNPL allows consumers to break up purchases into smaller, more manageable payments. For those without a formal credit history, consistent repayment could be another way to prove their fiscal responsibility. “We’re working currently with the industry to develop the best and most efficient way for reporting that information so that it becomes part of the official credit record,” Cartwright said.
3. Rather than calculating a credit score based on one point in time, TransUnion has pioneered the use of trended data — looking at trends over a three-year period to show the trajectory of consumer financial management and debt repayment performance. “This movement to trended data allowed us to access more information about consumers, and therefore, score tens of millions more consumers here in the U.S.,” Cartwright said.

The event also featured experts who explained AI’s role in financial inclusion. The panel consisted of Sammy Assefa, Head of AI and Machine Learning at the U.S. Bank; Raghu Kulkarni, VP of Data Science at Discover Financial Services; and Brian Stucky, Team Lead of Ethical AI at Rocket Central. The experts emphasized how data, when used accurately and efficiently, can expand credit access for “credit-invisible” populations, those who have good credit history, but wouldn’t normally qualify for credit. 

In addition to considering this data when evaluating credit scores, TransUnion also supports policy changes that would enhance credit building opportunities for Americans, including the reporting of rent payment information.

“We would love to partner and help advance these legislative efforts because it’s a great way to both strengthen the economy and allow fuller and fairer participation in the modern credit system,” Cartwright said.

To watch the entire event, click here.