The traditional credit scoring methodology has ruled the financial services space for decades, but it is clear the way in which consumers are managing their money and credit has evolved. When we layer on additional sources of data — like rental and utility payment history and short-term loans — suddenly a much more comprehensive picture of the consumer emerges.

There are 26 Million people in United States with insufficient credit history to have a Credit Score falling under the category of ThinFile/No-Hit.

• Someone young and new to credit world.

• A new immigrant who hasn’t established credit history.

• An elderly who hasn’t used credit in a long time.

• If someone shuns credit and mainly uses cash.

An additional layering of Data Inputs along with Traditional Model can provide a better view of Creditworthiness for people having insufficient credit history. This additional and relevant sources of data for Credit Scoring is knows as Alternative Credit Data.

Let’s deep dive into the world of Alternative Data:

Alternative credit data refers to the information used to evaluate creditworthiness that is not usually a part of traditional credit report.

This data provides more insight into both full-file and thin-file consumers, to drive greater visibility and transparency around inquiry and payment behaviors. Adding the information from alternative credit data sources may allow some consumers to gain more access to credit. Some examples:

• Rental payments

• Mobile phone payments

• Cable TV payments

• Bank account information, such as deposits, withdrawals or transfers

• Small dollar loans. Other types of alternative data might relate to things less closely tied to a person’s financial conduct, like that person’s education or occupation.

Explore the solution to know how all these inputs can be used for Credit Scoring.