US Agencies on Use of Alternative Data in Credit Underwriting

Based on that analysis, data that present greater consumer protection risks warrant more robust compliance management. Robust compliance management includes appropriate testing, monitoring, and controls to ensure consumer protection risks are understood and addressed. As the agencies gain a deeper understanding of alternative data usages, they may offer further information on the appropriate use of alternative data. Firms may choose to consult with appropriate regulators when planning for the use of alternative data. Alternative data include information not typically found in consumers' credit reports or customarily provided by consumers when applying for credit. Alternative data include cash flow data derived from bank account records of consumers. 

The agencies recognize the potential of alternative data to expand access to credit and produce benefits for consumers. To the extent firms are using or contemplating using alternative data, the agencies encourage responsible use of such data. In addition, the agencies are aware that the use of certain alternative data may present no greater risks than data traditionally used in the credit evaluation process. The agencies recognize that use of alternative data in a manner consistent with the applicable consumer protection laws may improve the speed and accuracy of credit decisions and may help firms evaluate the creditworthiness of consumers that currently may not obtain credit in the mainstream credit system.

Related Links

• Press Release
• Interagency Statement (PDF)

Keywords: Americas, US, Banking, Non-Bank Financial Institutions, Alternative Data, Credit Underwriting, Credit Unions, Credit Risk, Credit Origination, US Agencies