Experian is embracing open banking with a new product that lets Americans share their transaction data to get a 'Cashflow Score' that firms can use when making credit decisions.
Nearly 20% of Americans do not have a conventional credit score, making it difficult to secure credit. However, most people in the US have a bank account, and, says Experian, cashflow insights have proven to be indicative of credit risk.
The company says Cashflow Score can provide lenders with a clearer view of an applicant’s financial behaviour, including income, expenses, cash reserves and more. It can be used alongside traditional credit scores or on its own for people with limited or non-existent credit histories.
Experian takes consumer-permissioned transaction data provided by its clients. From there, Experian, acting as a technical service provider, it categorises the data and calculates attributes that are used to derive a score from 300 to 850 that can be used to make decisions across credit cards, personal loans, and auto loans.
Scott Brown, group president Experian Financial and Marketing Services, says: “We believe in a future where the power of credit data can be augmented with cashflow insights to enhance decisions and ultimately bring more consumers — including those who are traditionally underserved — into the financial ecosystem.
“We’re committed to leveraging our decades of data and analytics experience to deliver innovative and easy-to-use open-banking solutions to the industry while creating new opportunities for consumers.”