91.5 million consumers have little-to-no credit history.¹ Unfortunately, having no credit history makes it very difficult for many individuals to take out a loan. The challenge of so many individuals without a credit score is something lenders, consumers, and the credit ecosystem have been facing for a very long time. 65 million consumers are with thin credit files and 25 million consumers are “credit invisible,” those consumers who work or pay utility bills – but don’t use credit.¹ Having people without credit history can result in missed opportunities.
Due to the pandemic, many low income adults have been impacted financially. Many individuals need to take out a loan, but are unable to because they have no credit score. Don’t let the credit invisibles continue to fare worse than others. Beside consumers, this is a huge problem for lenders as lenders rely on credit scores in order to determine the right audience and approval criteria. With many consumers without a credit score or history, lenders need to find alternative ways to find the right approval criteria. Now is the time for lenders to widen their consumer scope with alternative data.
It’s important for our credit ecosystem to evolve, especially when facing a problem. If the credit ecosystem evolves it not only benefits consumers, but lenders as well. Building a more inclusive economy is important. If we continue to exclude these consumers with little to no credit history, we are diminishing credit access and missed opportunities for lenders.
However, as of recently, thanks to Equifax there have been other ways to identify scorable consumers. By widening their scope, customers and lenders will have more opportunities. According to Equifax, we believe there are multiple types of data that can help.
Below are four types of data Equifax provides:
These types of alternative data allow the credit invisible and people with thin credit files to have a second chance. Alternative data not only helps consumers but also can help your business with fraud prevention, credit risk assessment, collections, and marketing needs.
Say Yes to More Customers
Businesses need to keep up with the fast shifting economy and demands. The economy is always changing and for businesses to stay afloat, they need the right data and insight in order to perform. By saying “yes” to more consumers with more available credit data, you can do just that. You can extend credit offers up to 20% more applicants and in the end approve more loans to more customers. When expanding your pool of customers you can also make accurate decisions, provide appropriate offers, and prevent fraud.
Seeing the bigger picture with more data means having better and more opportunities. Subprime lenders realized $13.7 million in annual loss savings by using alternative data that only Equifax can provide.² With alternative data, lenders can move consumers from “unscorable” and thin file segments to the thick file segment. Only Equifax helps you drive smarter revenue while creating a better customer experience.
Next Step for Lenders
With all the different data options now available to lenders, lenders are now asking which alternative data is best for them. There is different alternative data to help lenders improve decision-making and streamline internal processes.
Learn more about the different types of alternative data Equifax provides for new and better opportunities for your business, by downloading our infographic, “Widen Your Scope. Broaden Your Perspective.” For more information or to request a demo, contact us today.