Experian and Oliver Wyman Find Expanded Data and Advanced Analytics Can Improve Access to Credit for Nearly 50 Million Credit Invisible and Unscoreable Americans
12 Janeiro 2022 - 08:00AM
Business Wire
New research outlines the challenges consumers
face when trying to access credit, how the financial services
industry can increase financial inclusion and score 96 percent of
applicants
Nearly 106 million U.S. consumers are unable to secure credit at
mainstream rates either because they are credit invisible,
unscoreable by conventional credit scores, or have a subprime or
below credit score according to new research released today by
Experian® and Oliver Wyman. The research shows that by using
expanded data sets such as rental payments, trended data, utility
information and more, and advanced analytics in their decisioning,
lenders can improve access to credit for nearly 50 million credit
invisible and unscoreable consumers, as well as millions of
consumers currently considered subprime.
“We are committed to providing lenders with the right tools and
insights to drive financial inclusion and have seen significant
progress in recent years with many leading lenders leveraging
expanded Fair Credit Reporting Act regulated data and advanced
analytics,” said Greg Wright, Chief Product Officer and Executive
Vice President at Experian Consumer Information Services. “Yet, as
an industry, we can and must do better to ensure more consumers can
access financial services at affordable rates. While the findings
show we are moving in the right direction, financial access depends
on complete industry adoption of new data and insights as well as
business practices that proactively address the historical gap
that’s existed in serving more consumers.”
Access to fair and affordable credit can help consumers get a
college degree, buy a car or home, start or expand a business and
ultimately help establish careers, build wealth and achieve greater
financial success. Yet, in Financial Inclusion and Access to
Credit, Experian and Oliver Wyman find 42 percent of the adult
population lacks a conventional credit score in the range that
would typically enable access to credit at mainstream rates.
Additional key findings include:
- Nineteen percent of American adults do not have a conventional
credit score. This includes 28 million adult Americans who are
credit invisible and 21 million who are unscoreable. An additional
57 million have subprime or below credit scores
- Credit invisibility more frequently impacts underserved
communities with 26% of Hispanic consumers and 28% of Black
consumers unscoreable or invisible compared to 16% of White and
Asian consumers
- Credit invisibility often impacts younger consumers, with 40%
of credit invisibles in the United States under 25
- Immigrants and consumers from low-income neighborhoods are more
likely to face barriers in accessing mainstream financial
services
The report shows lenders can expand access to credit for
currently underserved consumers by increasing the number of
consumers they can assess and by improving their ability to
identify the true credit quality of borrowers. Leveraging expanded
data, or nontraditional credit data, and advanced analytics can
help lenders achieve both.
According to Experian’s research, when advanced analytics and
machine learning are combined with expanded data sets as they are
with Experian’s Lift Premium™ score, 96 percent of applicants can
be scored, including an estimated 65 percent of the credit
invisible population and the entire conventionally unscoreable
population. This is significantly greater than the 81 percent of
consumers that can be scored by conventional scores. In addition, 6
million consumers whose conventional scores are subprime could be
upgraded to near-prime or above based on the expanded data used in
the score.
“Now is the time to begin leveraging sophisticated tools like
Experian Lift Premium™ to ensure all consumers can get the credit
they deserve,” added Wright.
The report also points to increased opportunities to further
drive financial inclusion with expanded data sets, including
utility payments, rental payments, consumer permissioned data and
bank account data. One example noted is Experian Boost™. Since
launching in 2019, nearly 9 million consumers have enrolled in
Experian Boost to improve their credit scores by adding their
on-time cell phone, utility and video streaming service payments
directly to their Experian credit file1.
Lenders increasingly can utilize not only their own relationship
banking data, but consumer-permissioned data from other financial
accounts to improve their credit decisions. The use of
consumer-permissioned data in underwriting, once the exclusive
province of fintech disruptors, is expanding among mainstream
lenders.
“Responsibly expanding access to credit is both an untapped
business opportunity, and a chance to have positive social impact
in our communities and with historically disadvantaged groups,”
said Mike Hepinstall, Partner at Oliver Wyman. “Better identifying
and serving creditworthy customers is an opportunity to grow while
doing good.”
For more information and to download the complete report, please
visit:
https://us-go.experian.com/driving-growth-with-greater-credit-access-white-paper?cmpid=pr-release
About Experian
Experian is the world’s leading global information services
company. During life’s big moments — from buying a home or a car,
to sending a child to college, to growing a business by connecting
with new customers — we empower consumers and our clients to manage
their data with confidence. We help individuals to take financial
control and access financial services, businesses to make smarter
decisions and thrive, lenders to lend more responsibly, and
organizations to prevent identity fraud and crime.
We have 20,000 people operating across 44 countries, and every
day we’re investing in new technologies, talented people and
innovation to help all our clients maximize every opportunity. We
are listed on the London Stock Exchange (EXPN) and are a
constituent of the FTSE 100 Index.
Learn more at www.experianplc.com or visit our global content
hub at our global news blog for the latest news and insights from
the Group.
Experian and the Experian trademarks used herein are trademarks
or registered trademarks of Experian and its affiliates. Other
product and company names mentioned herein are the property of
their respective owners.
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With
offices in 60 cities across 29 countries, Oliver Wyman combines
deep industry knowledge with specialized expertise in strategy,
operations, risk management, and organization transformation. The
firm has more than 5,000 professionals around the world who work
with clients to optimize their business, improve their operations
and risk profile, and accelerate their organizational performance
to seize the most attractive opportunities. Oliver Wyman is a
business of Marsh McLennan [NYSE: MMC]. For more information, visit
www.oliverwyman.com. Follow Oliver Wyman on Twitter
@OliverWyman.
1 Results may vary. Some may not see improved scores or approval
odds. Not all lenders use Experian credit files, and not all
lenders use scores impacted by Experian Boost.
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version on businesswire.com: https://www.businesswire.com/news/home/20220112005355/en/
Amanda Garofalo
Experian Public Relations 1 714 460 3739
amanda.garofalo@experian.com
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