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The Rise of Alternative and Trended Data

Mike Mondelli
Blog Post03/24/2016

For many lenders, the top strategic initiatives for 2016 may read something like this:

  • Improve acquisitions without increasing risk
  • Score more people with greater precision
  • Identify leading risk indicators

Reaching these goals becomes more difficult when your potential customers do not have substantial traditional credit data histories. According to The State of Alternative Data report, the majority of institutions surveyed turn away potential borrowers who do not meet risk guidelines when assessed with only traditional credit bureau information.

As economic markets and lending regulations change, many banks and finance companies are realizing emerging segments of the population, like Millennials, minorities, immigrants and rural dwellers, require a more holistic approach to risk assessment.

In fact, these emerging consumer segments are heavily underserved, yet could greatly benefit from access to quality financial services. Secondly, there may be a significant increase in your potential customer universe when these consumers can be scored.

Incorporating more payment information when assessing risk may help new-to-credit and underserved customers reach their financial goals. A more holistic approach provides the accuracy and precision necessary to gain a complete picture of consumer risk, significantly improve business decisions and build healthier portfolios.

With additional and different types of data, you can explore opportunities with more potential customers across all credit risk tiers, offer the right pricing, minimize institutional risk and capture greater wallet share. Consider your own strategy – do you have efforts in place to gain a more complete view of customers? Are you using additional data points to drive better business decisions and sustain growth?

Serving Communities with a Hybrid Approach to Risk Assessment

The right information can open the door to credit offerings for many consumers. To provide these offerings, it’s imperative to fully understand how applicants have managed financial commitments outside of traditional credit bureau tradeline data.

Lenders of all types are exploring how to better serve communities through the use of alternative and trended credit data, incremental to traditional credit bureau data. Greater depth and breadth of data across multiple sources provides the ability to serve more customers at the right price.

Learn more about  the state of alternative data