With more information regarding an individual’s financial history, more American consumers can harness the power of financial services. By leveraging bank transaction data, rental payments, utility and telecom bills, and verification of income and employment information, U.S. consumers can use their financial history to build a better financial future.
Understanding Alternative Data
This information, termed ‘alternative data’, describes the financial insights not included in traditional credit reports. Currently, 20% of American consumers lack the credit history necessary to establish a credit score. 64 million U.S. adults are underbanked or unbanked. 92 million have little or no credit history, and 25 million have been proclaimed credit invisible. By understanding alternative data, consumers can expand their access to credit, and the need to do so is ever-growing.
Under the umbrella of alternative data are rental payment, telecom and utility bills, verified income and employment history, and most under-utilized, bank transaction data. Consulting bank transaction data could increase consumers by 4 million to statuses of prime or better, and for all consumers, bank transaction information could reduce unscorable credit by 50%. 9 out of 10 U.S. consumers have their name on at least one utility bill. These hold untapped potency, as 9 million American adults could become scoreable by accessing consumer telecom and utility data. Additionally, more than 7.5 million Americans would be able to upgrade from unsociable or subprime into prime or near-prime with these two forms of data included for consideration.
Income and employment authentication can evaluate American consumers’ financial capacity to pay and assist in creating an understanding of their debt-to-income ratios. Verifying these can aid credit and lift over 7 million consumers into prime or super-prime statuses.