Gain a Comprehensive Understanding of Your Customers with Alternative Data

As a utility, telco, or pay TV service provider, you know the importance of making informed decisions about your customers. Credit scores are a valuable tool, but they don't tell the whole story. Many potential customers have limited credit history or are "credit invisible." Being credit invisible means  having no credit score at all. This can make it harder for them to get approved for certain services, even if they're responsible and reliable.

However, there is hope for the credit invisible when it comes to receiving opportunities to access more of your services. The solution: using alternative data. This information goes beyond traditional credit reports and includes things like:

• Payment history for rent, utilities, and cell phone bills

• Buy now, pay later plan history

By considering alternative data alongside traditional credit scores, you can get a more complete picture of a customer's financial responsibility. This is especially helpful for people who are new to credit, working to rebuild credit, or have a limited credit history.

Three Approaches to Using Alternative Data

In a recent white paper, Equifax analyzed three ways to use NCTUE data to improve your decision-making:

1. Multi-Data Attributes: This approach combines data from different sources (like credit reports and alternative data) to create a single, more comprehensive view of a customer's financial behavior.

2. Fusion Model: This method involves creating separate predictive models based on credit data and alternative data, then combining them into a single score.

3. Embedded Model: In this approach, a predictive model based on alternative data is incorporated into a new model that also considers a credit model.

Which Approach is Best?

Our analysis shows that all three approaches outperform traditional credit data alone. However, the multi-data attribute approach stands out as the most effective. It provides the most accurate predictions and aligns well with existing credit-only models, making it easier for you to adopt.

Benefits of Using Alternative Data

Incorporating NCTUE data offers several advantages for you:

• More informed decisions: Consumers with thin credit files may qualify for lower deposits and improved payment plans.

• Financial Inclusion: Alternative data helps level the playing field for people who are credit invisible or have limited credit history, giving them more opportunities to access more of your services.

• Reduced Risk: By getting a more complete picture of a consumer's financial responsibility, you can reduce your risk of delinquency.

• Increased Customer Satisfaction: When you can offer consumers access to more services and better terms, you'll see an increase in customer satisfaction and loyalty.

Conclusion

The use of alternative data is transforming the way utility, telco, and pay TV providers assess creditworthiness. By considering a broader range of financial information, you can make more informed decisions, expand access to your services, reduce risk, and ultimately improve your customers’ experience. 

Ready to Get Started?

If you're interested in learning more about how to use alternative data to improve your business results, contact us or download our white paper today. We can help you develop a strategy that's right for your business.