Member-driven. Member-centric. Member-friendly. No matter whatyou call it, today's members, or consumers, are driving the waybusinesses interact with credit unions and other providers. It'snot exclusive to the financial services industry – consumers aredriving the way we do business across the board, demanding thatbusinesses adapt to the way customers most want their needs to bemet. But credit unions may be challenged when trying to tailorbusiness to member-specific needs while simultaneously managingrisk. The competing and conflicting interests can impact membershipand growth in share of wallet.

But a goldmine of data, largely untapped by credit unions, couldenhance loan portfolios in the anticipated surge in consumerborrowing. While alternative credit data exists for consumerswith less than 700 credit scores – an estimated 113 millionconsumers – Big 3 bureaus never consider it.

This may be news to consumers. Out of 2,279 U.S. adults recentlysurveyed, 71% assume major credit bureaus are including allconsumer credit history, including non-traditional payments likeshort-term loans, online, rent-to-own and more. The survey,conducted by Radius Global Market Research in June 2017 andcommissioned by FactorTrust, showcases the disconnect betweenconsumers and their own credit data, in relation to the actual datalenders use to determine lines of credit.

Little do these consumers know, the true nature of their paymenthabits is not being accurately reflected in their credit files.Since the alternative loans they are taking out and repaying ontime are not included in their credit profiles, their credithistories are inaccurate and incomplete.

The omission of this type of alternative credit data –short-term loan and rent-to-own payments, for instance – means thatconsumers who successfully repay these non-traditional loans do notreceive the credit they deserve. But, 72% of U.S. adults believelenders would be more likely to consider a consumer for a loan withinformation about all of their loans, including alternative creditdata. Another 68% said their credit history would improve if itincorporated all of their payments including non-traditionalloans.

But that's not the only limitation of traditional bureau data.Today's news and media offers more questions than answers on theaccuracy of data coming from the Big 3. Traditional data is leadingto unsound loans, and regulators are taking note. Just this yearalone, two of the traditional credit reporting agencies were hitwith fines and refunds in the amount of $23 million for improperand inaccurate usage of data around consumer credit scores,according to the New York Times.

Still, even if the scores from the Big 3 credit bureaus werecorrect, they are not complete. They lack information. They don'tinclude real-time data on behavioral metrics that indicateconsumers' stability. Alternative credit data helps to pinpoint thenumber of times consumers move homes, the number of cell phonenumbers they use and the distinct number of banking accounts withwhich they do business, to name a few. This is meaningful datathat, when combined with public and private records, sanctions andidentity-related information, provides a better snapshot ofconsumer performances, helping to reveal a person's ability to payback a loan. This also increases a credit union's ability to betteridentify appropriate members and their needs, which lends its wayto growth in members' share of wallet.

Stagnant and slow in today's fast-paced environment, the limiteddata used by Big 3 bureaus does not remotely keep up with the needsof consumers, nor credit unions with whom they do business.

As a result, credit unions are being kept in the dark about thefull creditworthiness of consumers. Decisions should be made based on the complete picture ofconsumers' financial activities, not just a snippet ofinformation. All payments consumers have made should beaccounted for and factored into their scores. For a completepicture on the creditworthiness of loan candidates, alternativecredit data should be paired with Big 3 bureau data.

Fortunately, alternative credit data is the next generation ofdata. It is available in real-time and its highly predictiveperformance allows credit unions to be more nimble and moreresponsive to its members.

Alternative credit data has been tested and used by a number offinancing sources across many types of institutions in recentyears. Alternative data first appeared on the scene with the use ofpublic record information. Historically, short-term lenders werethe early adopters, followed by online lenders and now by manynon-prime consumer lending sources. More near-prime and primecredit unions, financing companies and banks are exploring theinclusion of alternative data into their scores and creditstrategies as well. Some might make the case that alternative datais mainstream in many sectors already.

In fact, the results of a survey of non-prime auto financingsources, also commissioned by FactorTrust and performed byConnections Insights in April 2017, confirm the use of alternativedata is common in the auto sector.

The study found that all participants either currently usealternative credit data or expect to in the near future. In fact,more than half of non-prime auto finance companies surveyed arealready using alternative data.

Without this complete data, deserving consumers are shut offfrom too many credit unions and other financial providers becausethey are overlooked by the Big 3 bureaus, creating a blind spot inthe decision-making process.

By opening the doors to a complete picture of underbankedconsumers, alternative credit data can help credit unions expand serviceofferings, increasing share of wallet and bolstering membershipbases.

Greg Rable is CEO forFactorTrust. He can be reached at 866-910-8497.