Tag: alternative credit data

Today’s lending market has seen a significant increase in alternative business lending, with companies utilizing new data assets and technology. As the lending landscape becomes increasingly competitive, consumers have more choices than ever when it comes to lending products. To drive profitable growth, lenders must find new ways to help applicants gain access to the loans they need. How Spring EQ is leveraging Experian BoostTM Home equity lender Spring EQ turned to Experian’s first-of-its-kind financial tool that empowers consumers to add positive payments directly into their credit file to assist applicants with attaining the best loan opportunities and rates. By using Experian BoostTM, which captures the value of consumer’s utility and telecom trade lines, in their current lending process, Spring EQ can help applicants near approval or risk thresholds move to higher risk tiers and qualify for better loan terms and conditions. Driving growth with consumer-permissioned data Over 40 million consumers in the U.S. either have no credit file or have insufficient information in their files to generate a traditional credit score. Consumer-permissioned data empowers these individuals to leverage their online financial data and payment histories to gain better access to loans and other financial services while providing lenders with a more comprehensive view of their creditworthiness. According to Experian research, 70% of consumers see the benefits of sharing additional financial information and contributing positive payment history to their credit file if it increases their odds of approval and helps them access more favorable credit terms. Read our case study for more insight on using Experian Boost to: Make better lending decisions Offer or underwrite credit to more people Promote the right credit products Increase conversion and utilization rates Read case study Learn more about Experian Boost

In the face of severe financial stress, such as that brought about by an economic downturn, lenders seeking to reduce their credit risk exposure often resort to tactics executed at the portfolio level, such as raising credit score cut-offs for new loans or reducing credit limits on existing accounts. What if lenders could tune their portfolio throughout economic cycles so they don’t have to rely on abrupt measures when faced with current or future economic disruptions? Now they can. The impact of economic downturns on financial institutions Historically, economic hardships have directly impacted loan performance due to differences in demand, supply or a combination of both. For example, let’s explore the Great Recession of 2008, which challenged financial institutions with credit losses, declines in the value of investments and reductions in new business revenues. Over the short term, the financial crisis of 2008 affected the lending market by causing financial institutions to lose money on mortgage defaults and credit to consumers and businesses to dry up. For the much longer term, loan growth at commercial banks decreased substantially and remained negative for almost four years after the financial crisis. Additionally, lending from banks to small businesses decreased by 18 percent between 2008-2011. And – it was no walk in the park for consumers. Already faced with a rise in unemployment and a decline in stock values, they suddenly found it harder to qualify for an extension of credit, as lenders tightened their standards for both businesses and consumers. Are you prepared to navigate and successfully respond to the current environment? Those who prove adaptable to harsh economic conditions will be the ones most poised to lead when the economy picks up again. Introducing the FICO® Resilience Index The FICO® Resilience Index provides an additional way to evaluate the quality of portfolios at any point in an economic cycle. This allows financial institutions to discover and manage potential latent risk within groups of consumers bearing similar FICO® Scores, without cutting off access to credit for resilient consumers. By incorporating the FICO® Resilience Index into your lending strategies, you can gain deeper insight into consumer sensitivity for more precise credit decisioning. What are the benefits? The FICO® Resilience Index is designed to assess consumers with respect to their resilience or sensitivity to an economic downturn and provides insight into which consumers are more likely to default during periods of economic stress. It can be used by lenders as another input in credit decisions and account strategies across the credit lifecycle and can be delivered with a credit file, along with the FICO® Score. No matter what factors lead to an economic correction, downturns can result in unexpected stressors, affecting consumers’ ability or willingness to repay. The FICO® Resilience Index can easily be added to your current FICO® Score processes to become a key part of your resilience-building strategies. Learn more

In today’s rapidly changing economic environment, the looming question of how to reduce portfolio volatility while still meeting consumers' needs is on every lender’s mind. So, how can you better asses risk for unbanked consumers and prime borrowers? Look no further than alternative credit data. In the face of severe financial stress, when borrowers are increasingly being shut out of traditional credit offerings, the adoption of alternative credit data allows lenders to more closely evaluate consumer’s creditworthiness and reduce their credit risk exposure without unnecessarily impacting insensitive or more “resilient” consumers. What is alternative credit data? Millions of consumers lack credit history or have difficulty obtaining credit from mainstream financial institutions. To ease access to credit for “invisible” and subprime consumers, financial institutions have sought ways to both extend and improve the methods by which they evaluate borrowers’ risk. This initiative to effectively score more consumers has involved the use of alternative credit data.1 Alternative credit data is FCRA-regulated data that is typically not included in a traditional credit report and helps lenders paint a fuller picture of a consumer, so borrowers can get better access to the financial services they need and deserve. How can it help during a downturn? The economic environment impacts consumers’ financial behavior. And with more than 100 million consumers already restricted by the traditional scoring methods used today, lenders need to look beyond traditional credit information to make more informed decisions. By pulling in alternative credit data, such as consumer-permissioned data, rental payments and full-file public records, lenders can gain a holistic view of current and future customers. These insights help them expand their credit universe, identify potential fraud and determine an applicant’s ability to pay all while mitigating risk. Plus, many consumers are happy to share additional financial information. According to Experian research, 58% say that having the ability to contribute positive payment history to their credit files makes them feel more empowered. Likewise, many lenders are already expanding their sources for insights, with 65% using information beyond traditional credit report data in their current lending processes to make better decisions. By better assessing risk at the onset of the loan decisioning process, lenders can minimize credit losses while driving greater access to credit for consumers. Learn more 1When we refer to “Alternative Credit Data,” this refers to the use of alternative data and its appropriate use in consumer credit lending decisions, as regulated by the Fair Credit Reporting Act. Hence, the term “Expanded FCRA Data” may also apply in this instance and both can be used interchangeably.

Update: After closely monitoring updates from the WHO, CDC, and other relevant sources related to COVID-19, we have decided to cancel our 2020 Vision Conference. If you had the chance to experience tomorrow, today, would you take it? What if it meant you could get a glimpse into the future technology and trends that would take your organization to the next level? If you’re looking for a competitive edge – this is it. For more than 38 years, Experian’s premier conference has connected business leaders to data-driven ideas and solutions, fueling them to target new markets, grow existing customer bases, improve response rates, reduce fraud and increase profits. What’s in it for you? Everything to gain and nothing to lose. Are you a marketer? These sessions were made to drive your conversion rates to new heights: Know your customers via omnichannel marketing: Your customers are everywhere, but can you reach them? Learn how to drive business-expansion strategy, brand affinity and customer engagement across multiple channels. Plus, gain insight into connecting with customers via one-to-one messaging. By invitation only, the future of ITA marketing: An evolving landscape means marketers face new challenges in effectively targeting consumers while staying compliant. In this session, we’ll explore how you can leverage fair lending-friendly marketing data for targeting, analysis and measurement. Want the latest in technology trends? Dive into discussions to transform your customer experience: Credit in the age of technology transformation: Machine learning and artificial intelligence are the current darlings of big data, but the platform that drives the success of any big data endeavor is crucial. This session will dive into what happens behind the curtain. Put away your plastic – next-generation identity: An industry panel of experts discusses the newest digital identity and authentication capabilities – those in use today and also exciting solutions on the horizon. How about for the self-proclaimed data geeks? Analyze these: Alternative data: Listen in on an in-depth conversation about creative and impactful examples of using emerging data assets, such as alternative and consumer-permissioned data, for improved consumer inclusion, risk assessment and verification services. The next wave in open data: Experian will share their views on the potential of advanced data and models and how they benefit the global value chain – from consumer scores to business opportunities – regardless of local regulations. And the risk masters? Join us as we kick fraud to the curb: Understanding and tackling synthetic ID fraud: Synthetic IDs present a serious challenge for our entire industry. This expert panel will explore the current landscape – what’s working and what’s not, the expected impact of the next generation SSA eCBSV service, and best practice prevention methods. You are your ID – the new reality of biometrics: Consumers are becoming increasingly comfortable with biometrics. Just as CLEAR has transformed how we use our biometric identity to move through airports, sports venues and more, financial transactions can also be made friction-free. The point is, there’s something for everyone at Vision 2020. It’s not just another conference. Trade in stuffy tradeshow halls and another tri-fold brochure for the insights and connections you need to take your career and organization to the next level. Like technology itself, Vision 2020 promises to connect us, unify us and enable us all to create a better tomorrow. Join us for unique networking opportunities, one-on-one conversations with subject-matter experts and more than 50 breakout sessions with the industry’s most sought-after thought leaders.    

It may be a new decade of disruption, but one thing remains constant – the consumer is king. As such, customer experience (and continually evolving digital transformations necessary to keep up), digital expansion and all things identity will also reign supreme as we enter this new set of Roaring 20s. Here are seven of the top trends to keep tabs of through 2020 and beyond. 1. Data that does more – 100 million borrowers and counting Traditional, alternative, public record, consumer-permissioned, small business, big business, big, bigger, best – data has a lot of adjectives preceding it. But no matter how we define, categorize and collate data, the truth is there’s a lot of it that’s untapped, which is keeping financial institutions from operating at their max efficiency levels. Looking for ways to be bigger and bolder? Start with data to engage your credit-worthy consumer universe and beyond. Across the entire lending lifecycle, data offers endless opportunities – from prospecting and acquisitions to fraud and risk management. It fuels any technology solution you have or may want to implement over the coming year. Additionally, Experian is doing their part to create a more holistic picture of consumer creditworthiness with the launch of Experian LiftTM in November. The new suite of credit score products combines exclusive traditional credit, alternative credit and trended data assets, intended to help credit invisible and thin-file consumers gain access to fair and affordable credit. "We're committed to improving financial access while helping lenders make more informed decisions. Experian Lift is our latest example of this commitment brought to life,” said Greg Wright, Executive Vice President and Chief Product Officer for Experian Consumer Information Services. “Through Experian Boost, we're empowering consumers to play an active role in building their credit histories. And, with Experian Lift, we're empowering lenders to identify consumers who may otherwise be excluded from the traditional credit ecosystem,” he said. 2. Identity boom for the next generation Increasingly digital lifestyles have put personalization and frictionless transactions on hyperdrive. They are the expectation, not a nice-to-have. Having customer intelligence will become a necessary survival strategy for those in the market wanting to compete. Identity is not just for marketing purposes; it must be leveraged across the lending lifecycle and every customer interaction. Fragmented customer identities are more than flawed for decisioning purposes, which could potentially lead to losses. And, of course, the conversation around identity would be incomplete without a nod to privacy and security considerations. With the roll-out of the California Consumer Privacy Act (CCPA) earlier this month, we will wait to see if the other states follow suit. Regardless, consumers will continue to demand security and trust. 3. All about artificial intelligence and machine learning We get it – we all want the fastest, smartest, most efficient processes on limited – and/or shrinking – budgets. But implementing advanced analytics for your financial institution doesn’t have to break the bank. And, when it comes to delivering services and messaging to customers the way they want it, how to do that means digital transformation – specifically, leveraging big data and actionable analytics to evaluate risk, uncover industry intel and improve decisioning. One thing’s for certain, financial institutions looking to compete, gain traction and pull away from the competition in this next decade will need to do so by leveraging a future-facing partner’s expertise, platforms and data. AI and machine learning model development will go into hyperdrive to add accuracy, efficiency, and all-out speed. Real-time transactional processing is where it’s at. 4. Customer experience drives decisioning and everything Faster, better, more frictionless. 2020 and the decade will be all about making better decisions faster, catering to the continually quickening pace of consumer attention and need. Platforms and computing language aside, how do you increase processing speed at the same time as increasing risk mitigation? Implementing decisioning environments that cater to consumer preferences, coupled with best-in-class data are the first two steps to making this happen. This can facilitate instant decisioning within financial institutions. Looking beyond digital transformation, the next frontier is digital expansion. Open platforms enable financial institutions to readily add solutions from numerous providers so that they can connect, access and orchestrate decisions across multiple systems. Flexible APIs, single integrations and better strategy and design build the foundation of the framework to be implemented to enhance and elevate customer experience as it’s known today. 5. Credit marketing that keeps up with the digital, instant-gratification age Know your customer may be a common acronym for the financial services industry, but it should also be a baseline for determining whether to send a specific message to clients and prospects. From the basics, like prescreen, to omni-channel marketing campaigns, financial institutions need to leverage the communication channels that consumers prefer. From point of sale to mobile – there are endless possibilities to fit into your consumers’ credit journey. Marketing is clearly not a one-and-done tactic, and therefore multi-channel prequalification offers and other strategies will light the path for acquisitions and cross-sell/up-sell opportunities to come. By developing insights from customer data, financial institutions have a clear line of sight into determining optimal strategies for customer acquisition and increasing customer lifetime value. And, at the pinnacle, the modern customer acquisition engine will continue to help financial institutions best build, test and optimize their customer channel targeting strategies faster than ever before. From segmentation to deployment, and the right data across it all, today and tomorrow’s technology can solve many of financial organizations’ age-old customer acquisition challenges. 6. Three Rs: Recession, regulatory and residents of the White House Last March, the yield curve inverted for the first time since 2007. Though the timing of the next economic correction is debated, messaging is consistent around making a plan of action now. Whether it’s arming your collections department, building new systems, updating existing systems, or adjusting rules and strategy, there are gaps every organization needs to fill. By leveraging the stability of the economy now, financial institutions can put strategies in place to maximize profitability, manage risk, reduce bad debt/charge-offs, and ensure regulatory compliance among their list of to-do’s, ultimately resulting in a more efficient, better-performing program. Also, as we near the election later this year, the regulatory landscape will likely change more than the usual amount. Additionally, we will witness the first accounts of what CECL looks like for SEC-filing financial institutions (and if that will suggest anything for how non-SEC-filing institutions may fare as their deadline inches closer), as well as see the initial implications of the CCPA roll out and whether it will pave a path for other states to follow. As system sophistication continues to evolve, so do the risks (like security breaches) and new regulatory standards (like GDPR and CCPA) which provide reasons for organizations to transform. 7. Focus on fraud (in all forms) With evolving technology, comes evolved fraudsters. Whether it’s loyalty and rewards programs, account openings, breaches, there are so many angles and entry points. Synthetic identity fraud is the fastest-growing type of financial crime in the United States. The cost to businesses is estimated to grow to $1.2 billion by 2020, according to the Aite Group. To ensure the best protection for your business and your customers, a layered, risk-based approach to fraud management provides the highest levels of confidence in the industry. Balance is key – while being compliant with regulatory requirements and conscious of user experience, ensuring consumers’ peace of mind is priority one. Not a new trend, but recognizing fraud and recognizing good consumers will save continue to save financial institutions money and reputational harm, driving significant improvement in key performance indicators. Using the right data (and aggregating multiple data sets) and digital device intelligence tools is the one-two punch to protect your bottom line. For all your needs in 2020 and throughout the next decade, Experian has you covered. Learn more

Retailers are already starting to display their Christmas decorations in stores and it’s only early November. Some might think they are putting the cart ahead of the horse, but as I see this happening, I’m reminded of the quote by the New York Yankee’s Yogi Berra who famously said, “It gets late early out there.” It may never be too early to get ready for the next big thing, especially when what’s coming might set the course for years to come. As 2019 comes to an end and we prepare for the excitement and challenges of a new decade, the same can be true for all of us working in the lending and credit space, especially when it comes to how we will approach the use of alternative data in the next decade. Over the last year, alternative data has been a hot topic of discussion. If you typed “alternative data and credit” into a Google search today, you would get more than 200 million results. That’s a lot of conversations, but while nearly everyone seems to be talking about alternative data, we may not have a clear view of how alternative data will be used in the credit economy. How we approach the use of alternative data in the coming decade is going to be one of the most important decisions the lending industry makes. Inaction is not an option, and the time for testing new approaches is starting to run out – as Yogi said, it’s getting late early. And here’s why: millennials. We already know that millennials tend to make up a significant percentage of consumers with so-called “thin-file” credit reports. They “grew up” during the Great Recession and that has had a profound impact on their financial behavior. Unlike their parents, they tend to have only one or two credit cards, they keep a majority of their savings in cash and, in general, they distrust financial institutions. However, they currently account for more than 21 percent of discretionary spend in the U.S. economy, and that percentage is going to expand exponentially in the coming decade. The recession fundamentally changed how lending happens, resulting in more regulation and a snowball effect of other economic challenges. As a result, millennials must work harder to catch up financially and are putting off major life milestones that past generations have historically done earlier in life, such as homeownership. They more often choose to rent and, while they pay their bills, rent and other factors such as utility and phone bill payments are traditionally not calculated in credit scores, ultimately leaving this generation thin-filed or worse, credit invisible. This is not a sustainable scenario as we enter the next decade. One of the biggest market dynamics we can expect to see over the next decade is consumer control. Consumers, especially millennials, want to be in the driver’s seat of their “credit journey” and play an active role in improving their financial situations. We are seeing a greater openness to providing data, which in turn enables lenders to make more informed decisions. This change is disrupting the status quo and bringing new, innovative solutions to the table. At Experian, we have been testing how advanced analytics and machine learning can help accelerate the use of alternative data in credit and lending decisions. And we continue to work to make the process of analyzing this data as simple as possible, making it available to all lenders in all verticals. To help credit invisible and thin-file consumers gain access to fair and affordable credit, we’ve recently announced Experian Lift, a new suite of credit score products that combines exclusive traditional credit, alternative credit and trended data assets to create a more holistic picture of consumer creditworthiness that will be available to lenders in early 2020. This new Experian credit score may improve access to credit for more than 40 million credit invisibles. There are more than 100 million consumers who are restricted by the traditional scoring methods used today. Experian Lift is another step in our commitment to helping improve financial health of consumers everywhere and empowers lenders to identify consumers who may otherwise be excluded from the traditional credit ecosystem. This isn’t just a trend in the United States. Brazil is using positive data to help drive financial inclusion, as are others around the world. As I said, it’s getting late early. Things are moving fast. Already we are seeing technology companies playing a bigger role in the push for alternative data – often powered by fintech startups. At the same time, there also has been a strong uptick in tech companies entering the banking space. Have you signed up for your Apple credit card yet? It will take all of 15 seconds to apply, and that’s expected to continue over the next decade. All of this is changing how the lending and credit industry must approach decision making, while also creating real-time frictionless experiences that empower the consumer. We saw this with the launch of Experian Boost earlier this year. The results speak for themselves: hundreds of thousands of previously thin-file consumers have seen their credit scores instantly increase. We have also empowered millions of consumers to get more control of their credit by using Experian Boost to contribute new, positive phone, cable and utility payment histories. Through Experian Boost, we’re empowering consumers to play an active role in building their credit histories. And, with Experian Lift, we’re empowering lenders to identify consumers who may otherwise be excluded from the traditional credit ecosystem. That’s game-changing. Disruptions like Experian Boost and newly announced Experian Lift are going to define the coming decade in credit and lending. Our industry needs to be ready because while it may seem early, it’s getting late.

A few months ago, I got a letter from the DMV reminding me that it was finally time to replace my driver’s license. I’ve had it since I was 21 and I’ve been dreading having to get a new one. I was especially apprehensive because this time around I’m not just getting a regular old driver’s license, I’m getting a REAL ID. For those of you who haven’t had this wonderful experience yet, a REAL ID is the new form of driver’s license (or state ID) that you’ll need to board a domestic flight starting October 1, 2020. Some states already offered compliant IDs, but others—like California, where I’m from—didn’t. This means that if I want to fly within the U.S. using my driver’s license next year, I can’t renew by mail. It’s Easier Than It Looks Imagine my surprise when I started the process to schedule my appointment, and the California DMV website made things really easy! There’s an online application you can fill out before you get to the DMV and they walk you through the documents to bring to the appointment (which I was able to schedule online). Despite common thought that the DMV and agencies like it are slow to adopt technology, the ease of this process may indicate a shift toward a digital-first mindset. As financial institutions embrace a similar shift, they’ll be better positioned to meet the needs of customers. Case in point, the electronic checklist the DMV provided to prepare me for my appointment. I sailed through the first two parts of the checklist, confirming that I’ll bring my proof of identity and social security number, but I paused when I got to the “Two Proofs of Residency” screen. Like many people my age—read: 85% of the millennial population, according to a recent Experian study—I don’t have a mortgage or any other documents relating to property ownership. I also don’t have my name on my utilities (thanks, roomie) or my cell phone bill (thanks Mom). I do however have a signed lease with my name on it, plus my renter’s insurance, both of which are acceptable as proof of residency. And just like that, I’m all set to get my REAL ID, even though I don’t have some of the basic adulting documents you might expect, because the DMV took into account the fact that not all REAL ID applicants are alike. Imagine if lenders could adopt that same flexibility and create opportunities for the more than 45 million U.S. consumers1 who lack a credit report or have too little information to generate a credit score. The Bigger Picture By removing some of the usual barriers to entry, the DMV made the process of getting my REAL ID much easier than it might have been and corrected my assumptions about how difficult the process would be. Experian has the same line of thought when it comes to helping you determine whether a borrower is credit-worthy. Just because someone doesn’t have a credit card, auto loan or other traditional credit score contributor doesn’t mean they should be written off. That’s why we created Experian BoostTM, a product that lets consumers give read-only access to their bank accounts and add in positive utility and telecommunications bill payments to their credit file to change their scores in real time and demonstrate their stability, ability and willingness to repay. It’s a win-win for lenders and consumers. 2 out of 3 users of Experian Boost see an increase in their FICO Score and of those who saw an increase, 13% moved up a credit tier. This gives lenders a wider pool to market to, and thanks to their improved credit scores, those borrowers are eligible for more attractive rates. Increasing your flexibility and removing barriers to entry can greatly expand your potential pool of borrowers without increasing your exposure to risk. Learn more about how Experian can help you leverage alternative credit data and expand your customer base in our 2019 State of Alternative Data Whitepaper. Read Full Report 1Kenneth P. Brevoort, Philipp Grimm, Michelle Kambara. “Data Point: Credit Invisibles.” The Consumer Financial Protection Bureau Office of Research. May 2015.

In today’s age of digital transformation, consumers have easy access to a variety of innovative financial products and services. From lending to payments to wealth management and more, there is no shortage in the breadth of financial products gaining popularity with consumers. But one market segment in particular – unsecured personal loans – has grown exceptionally fast. According to a recent Experian study, personal loan originations have increased 97% over the past four years, with fintech share rapidly increasing from 22.4% of total loans originated to 49.4%. Arguably, the rapid acceleration in personal loans is heavily driven by the rise in digital-first lending options, which have grown in popularity due to fintech challengers. Fintechs have earned their position in the market by leveraging data, advanced analytics and technology to disrupt existing financial models. Meanwhile, traditional financial institutions (FIs) have taken notice and are beginning to adopt some of the same methods and alternative credit approaches. With this evolution of technology fused with financial services, how are fintechs faring against traditional FIs? The below infographic uncovers industry trends and key metrics in unsecured personal installment loans: Still curious? Click here to download our latest eBook, which further uncovers emerging trends in personal loans through side-by-side comparisons of fintech and traditional FI market share, portfolio composition, customer profiles and more. Download now  

Would you hire a new employee strictly by their resume? Surely not – there’s so much more to a candidate than what’s written on paper. With that being said, why would you determine your consumers’ creditworthiness based only on their traditional credit score? Resumes don’t always give you the full picture behind an applicant and can only tell a part of someone’s story, just as a traditional credit score can also be a limited view of your consumers. And lenders agree – findings from Experian’s 2019 State of Alternative Credit Data revealed that 65% of lenders are already leveraging information beyond the traditional credit report to make lending decisions. So in addition to the resume, hiring managers should look into a candidate’s references, which are typically used to confirm a candidate’s positive attributes and qualities. For lenders, this is alternative credit data. References are supplemental but essential to the resume, and allow you to gain new information to expand your view into a candidate – synonymous to alternative credit data’s role when it comes to lending. Lenders are tasked with evaluating their consumers to determine their stability and creditworthiness in an effort to prevent and reduce risk. While traditional credit data contains core information about a consumer’s credit data, it may not be enough for a lender to formulate a full and complete evaluation of the consumer. And for over 45 million Americans, the issue of having no credit history or a “thin” credit history is the equivalent of having a resume with little to no listed work experience. Alternative credit data helps to fill in the gaps, which has benefits for both lenders and consumers. In fact, 61% of consumers believe adding payment history would have a positive impact on their credit score, and therefore are willing to share their data with lenders. Alternative credit data is FCRA-compliant and includes information like alternative finance data, rental payments, utility payments, bank account information, consumer-permissioned data and full-file public records. Because this data shows a holistic view of the customer, it helps to determine their ability to repay debts and reveals any delinquent behaviors. These insights help lenders to expand their consumer lending universe– all while mitigating and preventing risk. The benefits can also be seen for home-based and small businesses. Fifty percent of all US small businesses are home-based, but many small business owners lack visibility due to their thin-file nature – making it extremely difficult to secure bank loans and capital to fund their businesses. And, younger generations and small business owners account for 58% of business owners who rely on short term lending. By leveraging alternative credit data, lenders can get greater insights into a small business owner’s credit profile and gauge risk. Entrepreneurs can also benefit from this information being used to build their credit profiles – making it easier for them to gain access to investment capital to fund their new ventures. Like a hiring manager, it’s important for lenders to get a comprehensive view to find the most qualified candidates. Using alternative credit data can expand your choices  – read our 2019 State of Alternative Credit Data Whitepaper to learn more and register for our upcoming webinar. Register Now

Alex Lintner, Group President at Experian, recently had the chance to sit down with Peter Renton, creator of the Lend Academy Podcast, to discuss alternative credit data,1 UltraFICO, Experian Boost and expanding the credit universe. Lintner spoke about why Experian is determined to be the leader in bringing alternative credit data to the forefront of the lending marketplace to drive greater access to credit for consumers. “To move the tens of millions of “invisible” or “thin file” consumers into the financial mainstream will take innovation, and alternative data is one of the ways which we can do that,” said Lintner. Many U.S. consumers do not have a credit history or enough record of borrowing to establish a credit score, making it difficult for them to obtain credit from mainstream financial institutions. To ease access to credit for these consumers, financial institutions have sought ways to both extend and improve the methods by which they evaluate borrowers’ risk. By leveraging machine learning and alternative data products, like Experian BoostTM, lenders can get a more complete view into a consumer’s creditworthiness, allowing them to make better decisions and consumers to more easily access financial opportunities. Highlights include: The impact of Experian Boost on consumers’ credit scores Experian’s take on the state of the American consumer today Leveraging machine learning in the development of credit scores Expanding the marketable universe Listen now Learn more about alternative credit data 1When we refer to "Alternative Credit Data," this refers to the use of alternative data and its appropriate use in consumer credit lending decisions, as regulated by the Fair Credit Reporting Act. Hence, the term "Expanded FCRA Data" may also apply in this instance and both can be used interchangeably.

The universe has been used as a metaphor for many things – vast, wide, intangible – much like the credit universe. However, while the man on the moon, a trip outside the ozone layer, and all things space from that perspective may seem out of touch, there is a new line of access to consumers. In Experian's latest 2019 State of Alternative Credit Data report, consumers and lenders alike weigh in on the growing data set and how they are leveraging the data in use cases across the lending lifecycle. While the topic of alternative credit data is no longer as unfamiliar as it may have been a year or two ago, the capabilities and benefits that can be experienced by financial institutions, small businesses and consumers are still not widely known. Did you know?: -  65% of lenders say they are using information beyond the traditional credit report to make a lending decision. -  58% of consumers agree that having the ability to contribute payment history to their credit file make them feel empowered. -  83% of lenders agree that digitally connecting financial account data will create efficiencies in the lending process. These and other consumer and lender perceptions of alternative credit data are now launched with the latest edition of the State of Alternative Credit Data whitepaper. This year’s report rounds up the different types of alternative credit data (from alternative financial services data to consumer-permissioned account data, think Experian BoostTM), as well as an overview of the regulatory landscape, and a number of use cases across consumer and small business lending.     In addition, consumers also have a lot to say about alternative credit data:   With the rise of machine learning and big data, lenders can collect more data than ever, facilitating smarter and more precise decisions. Unlock your portfolio’s growth potential by tapping into alternative credit data to expand your consumer universe. Learn more in the 2019 State of Alternative Credit Data Whitepaper. Read Full Report View our 2020 State of Alternative Credit Data Report for an updated look at how consumers and lenders are leveraging alternative credit data. 

Millions of consumers lack credit history and/or have difficulty obtaining credit from mainstream financial institutions. To ease access to credit for “invisible” and below prime consumers, financial institutions have sought ways to both extend and improve the methods by which they evaluate borrowers’ risk. This initiative to effectively score more consumers has involved the use of alternative credit data.1 Alternative credit data is FCRA-compliant data that is typically not included in a traditional credit report and is used to deliver a more complete view into a consumer’s creditworthiness. “Alternative credit data helps us paint a fuller picture of a consumer so they can get better access to the financial services they need and deserve,” said Alpa Lally, Vice President of Data Business at Experian. Experian recently sponsored the FinovateSpring conference in San Francisco, where Alpa had a chance to sit down with Jacob Gaffney, Editor-in-Chief of the HousingWire News Podcast, to discuss ways consumers can improve their credit scores. As an immigrant, Alpa spoke personally about the impact of having a limited credit history and how alternative credit data can help drive greater access to credit for consumers and profitable growth for lenders through more informed lending decisions. Highlights include: How alternative and traditional credit data differ Types of alternative credit data being used by lenders How “credit-invisibles” can best leverage alternative credit data Alternative credit data product solutions, including Experian BoostTM Listen now 1When we refer to “Alternative Credit Data,” this refers to the use of alternative data and its appropriate use in consumer credit lending decisions, as regulated by the Fair Credit Reporting Act. Hence, the term “Expanded FCRA Data” may also apply in this instance and both can be used interchangeably.

“Experian is transforming our business from a traditional credit bureau to a true technology and software provider,” said Craig Boundy, CEO of Experian, North America, as part of his opening remarks Monday morning to kick off the 2019 Experian Vision Conference. “We are committed to working as a force of good.” Covering the themes of financial inclusion, giving consumers control of their lives and better outcomes, a digital-first society, and the latest trends in fraud and security, Boundy addressed a crowd of over 850. Alex Lintner, Experian’s Group President, gave a quick history of the past 3,000 years, from the first credit card, to the addition of wheels to a suitcase, to the iPhone and artificial intelligence. “Innovation is not invention,” Lintner said. He gave the example of the iPhone and how a tear down analysis revealed there were no new elements; however, it was the translation of an idea into a good or service that benefited everyone (as the entire audience raised their hand when asked who had a smart phone). Lintner’s mainstage presentation also featured three live demos, including how the Ascend Technology Platform takes complex model building and outputs from days and weeks to a few clicks, to the incorporation of Small Business Financial Exchange (SBFE) data into the Ascend Analytical Sandbox (incorporating more than 17 years of small business tradeline data and 150 predictive attributes) and lastly, Experian Boost, which according to a live tracker, has boosted consumer credit scores by a total of 3.2 million points, as of this morning, since its launch eight weeks ago. Keynote Speaker: Gary D. Cohn Gary D. Cohn, Former Director of the U.S. National Economic Council, was Monday morning’s keynote speaker. He weighed in on the domestic and global economy, policy issues, financial institutions’ responsibilities and some of his predictions. Cohn brought attention to the ever-changing financial services space, including new forms of encryption and the world of biometric security, calling the financial services industry the “tip of the spear” when it comes to the digitization of the world. Session Highlights - Day 1 Machine Learning From the building blocks of neural networks to artificial intelligence, machine learning has been used in the areas of financial services that do not have adverse actions – think fraud, ID, collections. As we look to harness machine learning for models and other spaces (including adverse action), it’s important to delineate descriptive data (what’s happening now); predictive data (what’s happening in the future); prescriptive data (what am I going to do now); and cognitive data (are we asking the right question?). In addition, it’s necessary to address the five advanced analytic drivers including customer experience, cost, risk and loss, growth and compliance. Home Equity & Lending US macroeconomic trends show consumer confidence is still on an upward trend. While investor confidence is a little volatile, the GDP remains strong (though slightly slowing down) and unemployment is low and forecasted to remain low. Since 2006, the US hasn’t returned in the HELOC space. Mortgage and personal loans are up 20% and 13% respectively, while mortgages have dropped 1% and HELOCs have dropped 2%. With an estimated market potential of over $700 billion, HELOCs may be an untapped credit line given the strength of the economy. Identity Evolution From dumpster divers, aka pulling receipts out of dumpsters behind businesses, to today’s identity-based authentication, there’s been an evolution of how identity is defined as well as its corresponding risks. According to Experian’s Global Fraud & Identity Report, 74% of consumers value security as the most important part of the online experience (over convenience and personalization). However, 74% of consumers abandoned a shopping session that required too much information, and 72% of consumers said they were willing to share more data if it meant a seamless experience. What does this mean? Consumers want it all. Identity today now includes proxies and activity, which can also mean greater risk. Because of aggregators and other associated entities acting on a consumer’s behalf, there are lots of nuances that will need to be looked through. Consumer-Permissioned Data In order to be more consumer-centric, there are four levers through which consumers are given control: data accuracy, knowing their financial profile, the ability to improve their scores (via Experian BoostTM and UltraFICOTM) and protecting consumers when they permission access to their identity credentials. Using Experian Boost, consumers have seen an average increase of 13 points for consumers with positive changes. Additionally, using alternative credit data, financial institutions can score more people and score more accurately. One hundred million consumers could gain greater access to credit with consumer-permissioned data sources.   --- Meanwhile, the tech showcase featured over 20 demos covering alternative data, digital credit marketing, consumer empowerment, fraud and identity, integrated decisioning and technology. More insights from Vision to come. Follow @ExperianVision and #ExperianVision on Twitter to see more of the action.

Experian’s 38th annual Vision Conference kicks off on Sunday, May 5 in San Antonio, Texas. The sold-out thought leadership conference, is known for driving discussions on the industry’s hard-hitting topics as well as introducing the latest and greatest in technology, innovation and data science. “For 38 years, Experian’s Vision Conference has connected business leaders to new ideas and solutions through cutting edge data and insights. Our goal is to power opportunities for you to target new markets, grow existing customer bases, improve response rates, reduce fraud and increase profits by using our data, analytics and technology. The intimate setting of the conference allows for unique networking opportunities with the industry’s most sought-after thought leaders,” said Klaudette Christensen, Experian’s Chief Operations Officer. A few spotlight sessions include: Several sessions about machine learning and artificial intelligence, highlighting opportunities related to best practices, underwriting and fraud detection A deep dive into the modern mortgage, leveraging insights on home equity and how to leverage data and analytics to redefine the process as it’s known today Sessions on credit delinquency, collections and the Great Recession Marketing analytics and the latest releases from Experian’s Ascend Platform Sessions on advanced analytics and integrated decisioning as they relate to commercial and consumer insights The event, which runs through Tuesday evening, continues its tradition of featuring several noteworthy keynote speakers. On Monday, Gary D. Cohn, American business leader, philanthropist and former Director of the U.S. National Economic Council, will kick off the event. On Tuesday, Aimée Mullins will take the stage discussing what is “possible” by drawing from her experiences as a record-breaking Olympic athlete, model and actress. The closing keynote will feature five-time NBA Champion and two-time Olympic Gold Medalist, Kobe Bryant. The event will also include a Tech Showcase, featuring hands-on demos for attendees to experience. Stay tuned for additional highlights and insights on our social media platforms throughout the course of the conference. Follow Experian Insights on Twitter and LinkedIn and check out #ExperianVision.

Your consumers’ credit score plays an important role in how lenders and financial institutions measure their creditworthiness and risk. With a good credit score, which is generally defined as a score of 700 or above, they can quickly be approved for credit cards, qualify for a mortgage, and have easier access to loans with lower interest rates. In the spirit of Financial Literacy Month, we’ve rounded up what it takes for consumers to have a good credit score, in addition to some alternative considerations. Pay on Time Life gets busy and sometimes your consumers miss the “credit card payment due” note on their calendar squished between their work meetings and doctor’s appointment. However, payment history is one of the top factors in most credit scoring models and accounts for 35% of their credit score. As the primary objective of your consumers’ credit score is to illustrate to lenders just how likely they are to repay their debts, even one missed payment can be viewed negatively when reviewing their credit history. However, if there is a missed payment, consider checking their alternative financial services payments. They may have additional payment histories that will skew their creditworthiness more so than just their record according to traditional credit lines alone. Limit Credit Cards When your consumers apply for a new loan or credit card, lenders “pull” their credit report(s) to review their profile and weigh the risk of granting them credit or loan approval. The record of the access to their credit reports is known as a “hard” inquiry and has the potential to impact their credit score for up to 12 months. Plus, if they’re already having trouble using their card responsibly, taking on potential new revolving credit could impact their balance-to-limit ratio. For your customers that may be looking for new cards, Experian can estimate your consumers spend on all general-purpose credit and charge cards, so you can identify where there is additional wallet share and assign their credit lines based on actual spending need. Have a Lengthy Credit History The longer your consumers’ credit history, the more time they’ve spent successfully managing their credit obligations. When considering credit age, which makes up 21% of their credit score, credit scoring models evaluate the ages of your consumers’ oldest and newest accounts, along with the average age of all their accounts. Every time they open new credit cards or close an old account, the average age of their credit history is impacted. If your consumer’s score is being negatively affected by their credit history, consider adding information from alternative credit data sources for a more complete view. Manage Debt Wisely While some types of debt, such as a mortgage, can help build financial health, too much debt may lead to significant financial problems. By planning, budgeting, only borrowing when it makes sense, and setting themselves up for unexpected financial expenses, your consumers will be on the path to effective debt management. To get a better view of your consumers spending, consider Experian’s Trended3DTM, a trended attribute set that helps lenders unlock valuable insights hidden within their consumers’ credit scores. By using Trended3DTM data attributes, you’ll be able to see how much of your consumers’ credit line they typically utilize, whether they tend to revolve or transact, and if they are likely to transfer a balance. By adopting these habits and making smart financial decisions, your consumers will quickly realize that it’s never too late to rebuild their credit score. For example, they can potentially instantly improve their score with Experian Boost, an online tool that scans their bank account transactions to identify mobile phone and utility payments. The positive payments are then added to their Experian credit file and increase their FICO® Score in real time. Learn More About Experian Boost Learn More About Experian Trended 3DTM