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Latest State of Alternative Credit Data report shows most consumers willing to provide additional information to lenders for improved credit access
Costa Mesa, Calif., Sept. 17, 2020 — As part of its mission to use data to keep the credit economy open to more consumers, Experian® today released its latest State of Alternative Credit Data report. The study highlights consumer and lender perceptions about leveraging alternative credit data against the backdrop of COVID-19, revealing 80 percent of consumers feel including items such as utility or mobile phone payment history would have a positive impact on their credit score and nearly 90 percent of lenders believe alternative credit data allows them to extend credit to more consumers.
Experian’s report also found 69 percent of consumers are worried about their finances and one in five plans to open a credit card within the next six months. At the same time, 96 percent of lenders believe using alternative credit data allows them to more closely evaluate consumer creditworthiness in times of economic stress.
“There is no question COVID-19 has created a difficult economic reality for millions of Americans. As we think about economic recovery, all of us in the financial services industry must work together to support consumers and maintain the integrity and openness of the credit market,” said Greg Wright, executive vice president and chief product officer for Experian Consumer Information Services. “Incorporating alternative and consumer permissioned data attributes into decisioning processes empowers lenders to extend credit responsibly while helping consumers access the financial services they need in the current economic environment and beyond.”
Alternative credit data, sometimes called expanded FCRA-regulated credit data, refers to information not traditionally included in credit reports. Incorporating alternative credit data into credit decisioning can help consumers with limited or no credit histories gain access to financial services while providing a clearer picture of a prospective borrower’s creditworthiness.
Additional State of Alternative Credit Data report findings include:
• Three out of four consumers believe they are a better borrower than their credit score represents
• If given a choice, most consumers would prefer alternative credit data sources — such as utility bill payment history (84%), cell phone payment history (83%) and rental payment history (80%) — be evaluated in their credit history
• 80% of consumers would likely share various types of financial information with lenders if it meant increased chances for approval or improved interest rates on credit
• 74% of consumers believe giving lenders access to their financial data via their bank account would be more convenient than providing hard copy documents
Experian conducted two national online surveys with both credit providers and consumers regarding attitudes, awareness and use of alternative credit data.
For the lender survey, 136 partial and completed responses were collected from financial institution representatives who have the responsibility of choosing their organization’s data services. The financial institutions survey was fielded in April 2020.
For the consumer findings, Experian conducted a nationwide online survey of 504 respondents who were planning to apply for credit within the next three months, with survey invitations balanced to the U.S. Census. The consumer survey was fielded from May 1 to May 5, 2020.
To learn more about alternative credit data, please visit: https://www.experian.com/consumer-information/alternative-data.
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