Alternative Data

Alternative data is essentially anything that falls outside of traditional financial or fundamental data. Alternative data includes new data sources  including alternative financing, account aggregation, as well as on-time utility and rental payments. Financial institutions are adopting and benefiting from these new data sources.

Without credit, it is nearly impossible to buy a home or start a business. People face barriers to accessing credit or pay more for credit for several reasons. Some have negative items on their credit report, such as a record of late payments. Some have trouble documenting their income.

Still others have either no credit history or a credit history that is too scarce, or “thin,” to generate a credit score. This issue affects an estimated 62 million Americans and more often affects African-American, Hispanic and low-income consumers, according to the Consumer Financial Protection Bureau (CFPB).

This is where alternative credit data can play a positive role.