Lenders are continuously searching for good credit risks, but a substantial share of the U.S. adult population either lacks a credit score or has a score below the prime threshold. And some borrowers may take on financial obligations not captured in a traditional file, making them worse risks than their credit report reflects. Aite Group’s newest report, Alternative Data Across the Loan Life Cycle: Credit for More, Visibility for All, examines the extent to which consumer lenders are using alternative data and for what purposes across the loan life cycle.
“Alternative data can help lenders better identify good credit risks among the more than half of U.S. adults without a prime credit score while also fending off fraudsters,” explains Leslie Parrish, senior analyst at Aite Group.
This new report provides an overview of the types of alternative data available to lenders, how lenders use such alternative data, and the opportunities and challenges alternative data presents to lenders. It is based on 15 in-depth interviews that Aite Group conducted in September and October 2018 with alternative data vendors and lenders in the United States. It also contains analysis from a 2018 Aite Group survey of 22 U.S. retail credit executives from banks, credit unions, finance companies, and fintech lenders.