Using Alternative Data to Help Automate Decisioning Throughout the Credit Lending Journey

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Rising inflation and layoffs may impact spending habits as many Americans may be stretched thin for cash and seek borrowing options for extra capital. It is common for consumers to request new credit or increases in lines of credit from their card providers to curb the loss of employment or to take on additional expenses like furniture for a new apartment, recreational traveling or entertainment.

To help ensure borrowers are not overextending themselves or taking on more debt than they can handle, credit unions should prioritize leveraging alternative data. Using alternative data sources, such as employment and income verifications, would better allow credit unions to deter the risk of delinquency or defaults by members on credit card payments by expanding their view of members’ financial health during the application process. Credit unions that leverage alternative data to reduce credit-loss rates may be able to present better terms and offers at application to card applicants while protecting themselves from undue risk.