Alternative Data’s Role in Financial Inclusion

How new solutions can help expand access to credit

Every financial “first'' – a first credit card, first car or first home – is an important, defining event in a person’s financial life — and has the ability to impact an entire family for generations. For the ~76 million U.S. adults¹ who have a thin credit file (four or fewer credit accounts) or are credit invisible (do not have a traditional credit file), the ability to create a fuller financial picture can help them in taking that first step.

 

 

Alternative Data

While credit reports remain a strong indicator of credit history and past financial reliability, data not included in traditional credit reports has the potential to help responsibly expand consumer access to credit and support a more inclusive economy. Unique alternative data and analytics from Equifax, including information such as verified income, telecommunications and utility payment history, and cash flow insights, can help to create a fuller financial picture of millions of people.

Nearly one in three Americans has a thin credit file or is credit invisible.¹ They are represented by a variety of population segments such as recent immigrants, young or new credit users, or cash-preferred individuals, among others. 

In addition to helping people establish a fuller credit file, specially designed scoring models that utilize alternative data can positively impact credit scores. Incorporating alternative data could shift over eight million U.S. consumers into scorable credit bands, and could help another 13.6 million qualify for better offers and rates.¹

 

 

These changes can help open the door to economic opportunities. With a fuller picture of a person’s financial profile, they may be eligible for a broader range of loans, and may be offered credit with potentially lower interest rates.

We are the first Nationwide Consumer Reporting Agency to deliver telecommunications, pay TV and utilities insights alongside mortgage credit reports, helping to create greater homeownership opportunities for millions of consumers. Equifax OneScore, a consumer credit scoring model that combines our leadership in alternative data insights with the power of the Equifax Cloud™, utilizes EFX.AI technology to help score more people. Through solutions like these, we are helping our customers create a “first” financial milestone, big or small, for more people.

Partnering with lenders to offer alternative data solutions that help more people get the things they want and need is part of our commitment to driving a more-inclusive financial ecosystem. It’s also core to our company's purpose: to help people live their financial best. 

Check out the power of our alternative data and how it can help expand access to credit.