Life in 3D: Using Alternative Data to Power Credit Risk Decisioning
As humans we see the world in 3D. It helps us judge everything we do, from reading people’s reactions so we can respond accordingly to knowing how high we should step to make sure we don’t fall. Yet as a lender you’re often forced to determine credit risk in one dimension, using a traditional credit score. And if there is no credit score, you are inclined to walk away. So, as a lender, how do you take your 1D view of a prospective customer, either a business or an individual, and see in 3D to assess credit risk?
You explore alternative data to fill in the blanks.
Today, alternative data enables you to create a more agile approach to your credit risk decisioning process. It unlocks a new world of information — location, social media presence, text message history, job histories, education, and Internet searches, all of which can play a significant role in driving an alternative data approach to credit risk decisioning. An approach that is not reliant on a traditional credit report. Think of your potential customers as a 3D image waiting to be seen. How will you see these faces and ultimately determine if you should lend to them?
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