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SPARK 2019 CONFERENCE
DATA
Expanding
Coverage.
Painting a clearer picture of credit invisibles with alternative data
BY: PETER OBURU, PH.D, USIS DATA LEADER
EDITOR’S NOTES
In the world of consumer credit, information DEEPENING UNDERSTANDING
asymmetry describes the imbalance between Within the U.S. traditional credit database,
lenders and consumers. Businesses today 27% of consumers are classified as thin file
can minimize information asymmetry by – consumers with limited credit history. The
incorporating alternative data – commonly remaining consumers are either classified
referred to as non-traditional data – in solutions as thick file (consumers with sufficient credit
for consumers. history) or “unscoreable” – 71.3% and 1.7%
respectively.
In front of a live audience at Spark, Peter
Oburu – who leads a data science team at By harnessing alternative data, 11.4 million
Equifax – spoke with a chief data officer at consumers move from the “unscoreable” and
a marketing and commuinications company thin file segments to the thick file segment.
about the power of alternative data. (The increase in “thick” consumers is due to
the additional trade lines from alternative data.
EXPANDING COVERAGE
Historically, lenders use credit data to score A trade line is a record of credit activity that
helps lenders score consumers.) Moreover,
consumers. This practice prevents lenders an extra 50 million thin file consumers have
from seeing consumers who are credit invisible additional trade lines even though they do not
– the number stands at 25 million consumers move to the “thick” segment. (See charts)
at the time of publication. Some consumers,
who work, pay utility bills or rely on specialty SHIFTING CONVERSATION
financing, but do not use credit, may be In the past, data and analytics experts inside
considered credit invisible. When businesses the credit industry struggled with the binary
partner with Equifax, and incorporate question: should a business use alternative
alternative data into their models, lenders will data? Today industry professionals ask:
discover 10 million previously credit invisible which alternative data is best for my specific
consumers. challenge?
WWW.EQUIFAX.COM/SPARK
