Why Alternative Credit Scoring is a Necessity

An insanely large number of people are regarded as credit invincible and unseen by the traditional credit rating system.?

?While they do not have bad credit, they do not have enough credit to obtain a home or auto loan. In addition, they may have difficulty renting apartments or even qualifying for some jobs because they are invisible on every metric credit bureaus use to assess a person's creditworthiness.?

Incorporating alternative credit scoring in every lending system helps include credit invincibles, reduce lending risks, and increase revenue for financial institutions.?

Here are some reasons why alternative credit scoring is a necessity?

1. Improves Credit Worthiness

Alternative credit scoring evaluates a consumer's future creditworthiness based on information from their credit history. The score includes delinquencies, average account age, loan and credit card utilization rates, and other factors.

It allows consumers who have been previously classified as high-risk to be scored accurately so those appropriate credit entries can be made.

2. Peer-to-peer lending?

Peer-to-peer lending is a trend in the business lending world. It enables businesses with no credit history to seek funding without resorting to traditional loans. This method is popular among startups because it helps them stay sustainable until they are more established.

?p2p platforms can leverage alternative data to mitigate possible loss and serve more customers.?

3. Lesser Credit Invincibles

Alternative data has been used to help lenders serve underserved markets. It's not just a new tool for credit scores but also serves as a way to provide feedback to lenders on the borrower's true credit situation.?

It provides a more holistic view of a borrower's credit history to help the lender better understand and assess their ability to repay debt.?

Alternative data can also provide more information to lenders, easing the credit decision-making process.?

It's time to serve more customers and walk closer to financial inclusion in Africa. Oystr Finance is a large alternative data provider, providing accurate data to help serve the credit invincibles and underserved communities. Visit www.oystrfinance.com to learn more.?