The Future of Credit? Traditional Credit Data Meets Alternative Credit Data
Alternative data is driving heated discussion in fintech, credit, and financial spaces. Why?
It could be the next frontier for consumer financial data. Traditional credit data has been, and continues to be, the driving force behind credit data-driven processes, flows, and decisioning. It has significant coverage and a long history of utilization. Yet, there’s an increasing segment of consumers that are not well represented by traditional credit data. Where traditional credit leaves off, alternative data picks up. There are benefits and challenges to both and companies are learning how to expand their models with broader data sets.
At Fintech Nexus 2023, CRS and Nova Credit CEOs, Stephen Hawkins and Misha Esipov, took the stage to highlight the importance of alternative credit data – also referred to as consumer permission data – in enhancing credit assessment and encouraging fair and informed lending decisions. They dig into the challenges associated with implementing this growing dataset and offer solutions to make it more accessible and beneficial for fintechs, lenders, and financial industry leaders. There’s a world of opportunity to explore.
Traditional Credit Data
200 million.
The number of consumers represented in the traditional credit system. This is the power behind traditional credit data from the credit bureaus – Equifax, Experian, TransUnion. The bureaus have been collecting and providing data for six decades or more.
“You have 200 million consumers for which data is parsed out, studied, researched, analyzed, and used in an incredible amount of arenas. You’ve got large institutions like Freddie Mac and Fannie Mae, who have diced and sliced that data to such an extent that they can have a really powerful way to predict those models using that data.”