FactorTrust, a leading aggregator of payment data from financially underserved consumers, and FICO, a leading provider of credit scores and credit behavior analytics, have announced a new partnership.
The companies said adding data from underserved consumers into widely used credit models will allow lenders to better judge – and lend – to consumers who may have thin or even non-existent credit bureau files.
This should both help lenders find new markets and expand credit to a broader array of people, the companies said.
“Alternative data can be a valuable supplement to traditional data sources for risk assessment,” said Andrew Jennings, FICO's chief analytics officer and head of FICO Labs. “By combining alternative data, advanced analytics and decision services, lenders can now make better credit decisions on people who don’t have a credit history, and who have therefore found it hard to obtain credit,” Jennings said.
Greg Rable, CEO at FactorTrust, said, “The demand for alternative financial services continues to grow as consumers look for instant, efficient and secure products that they haven’t been able to get from traditional lenders.
“I am excited that this partnership will provide an opportunity to underbanked-focused lenders to offer more product choices to these consumers by having a broader view of credit behavior. Lenders will be able to offer more products, more tailored to their consumers.”
FactorTrust said it has been aggregating data from financially underserved consumes since 2005 and has been working to challenge stereotypes about them, reporting, for example, that 32% of financially underserved consumers own their own homes.