By Brandi Hamilton
Credit reports and traditional credit scores are a mainstay of consumer lending, but Fair Credit Reporting Act (FCRA)-compliant information that is not included in traditional credit report data, such as income and employment data, has the potential to help responsibly expand consumer access to credit opportunities and support a more inclusive economy. In addition, leveraging this type of alternative data can help mortgage lenders make loans available to more worthy homebuyers.
When potential responsible borrowers are shut out of the mortgage process because of a low credit score, it’s a lose-lose-lose scenario for those borrowers, their potential lenders, and the economy. Building a more inclusive set of financial practices helps bring more consumers into the financial mainstream. Their full participation in the economy and better access to credit can mean more consumer spending, spurring economic growth.
It starts with greater visibility with data such as income and employment data. This data helps lenders:
Brandi Hamilton had the opportunity to dive into the importance of alternative loan decisioning data, creating greater visibility for borrowers, mortgage lenders not missing out on servicing a viable borrower and how FIs can make financially inclusive decisions in the latest Progress In Lending.