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The credit scoring process is being extended to alternative data sources that will allow greater access to credit by categories of people that are often excluded based on traditional data
Milan, February 15, 2022 – Experian and Fairtile are collaborating to help people who struggle to access mainstream credit because there is little or no traditional data available about them for lenders to make decisions. The two companies are focused on opening the credit scoring process to new and alternative data sources to help people without a traditional credit history.
Experian, the global information services company, and Fairtile, a financial technology startup developing a modern multi-cloud platform for credit intelligence and automation services, have launched the project for alternative credit scoring solutions.
It will allow Experian and Fairtile to combine their expertise, methodologies and technologies to develop new solutions that integrate traditional credit scoring with alternative, digital sources.
Experian and Fairtile share the mission to harness the power of data to create opportunities for people, businesses and society. With the goal of making access to credit an increasingly inclusive process, the collaboration between the two companies will progressively integrate data from alternative digital sources into credit scoring processes, in addition to the traditional sources used to evaluate credit applications.
"Many people find it hard to access credit because there is no information available for lenders to make accurate credit assessments. As a result, they have to pay higher rates or can't get the credit they need at all," says Cristina Iacob, Experian. "Through the collaboration with Fairtile, we will be able to support consumers in accessing credit in a simple and secure way, leveraging the available information on the right channels, always in absolute compliance with GDPR principles, as well as transparency and fairness.. On their side, banks and lenders will be able to build a more complete and reliable picture of the situation of credit applicants, taking better business decisions more quickly and reaching out to an audience barely assessed before, therefore almost invisible to credit."
"The evolution of technology is bringing an extraordinary impact, also and above all in the world of payments and more generally of credit," adds Cristiano Motto, Fairtile. "Behaviours have changed over time, many more tools are available, and traditional approaches risk no longer being adequate. This is why we decided to study the digital behaviour of consumers, with the aim of making it a useful asset first and foremost for the consumers themselves, and to help create a more open and inclusive world of credit."
Historically, credit scoring algorithms have been based on 'traditional' information, organised into different categories: payment history, financial position, length of credit history, credit mix, and new credit. However, this consolidated process can sometimes exclude consumers who do not have a credit history for many reasons such as age, because they are new to Italy or because they are not used to traditional financial instruments.
Fairtile focuses its offering on using next-generation algorithms to enable a more extensive analysis of available data to properly evaluate a user's creditworthiness via the use of such digital sources. It helps the financial market collect and digest different types of structured and unstructured data and use this data for solutions that take the most value out of its psychological, sociological and behavioural profiling components. These elements drive the platform models and underlying engine.
Experian has always worked to help consumers access credit, providing companies with the tools they need to make informed decisions based on the most complete picture possible. It allows organisations to take advantage of the opportunities offered by the market with confidence while significantly reducing the risk of fraud.
The addition of alternative data sources can help lenders to understand people's financial behaviour on different digital platforms that traditional credit scoring systems do not capture. It means the number of people potentially interested in applying for credit - whether for personal or professional reasons - is greater than ever. This opens up new markets for banks and lenders, as well as significant potential business opportunities.
Experian is the world's leading global information services company. During life's big moments – from buying a home or a car, to sending a child to college, to growing a business by connecting with new customers – we empower consumers and our clients to manage their data with confidence. We help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organisations to prevent identity fraud and crime.
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