Credit Optics Full Spectrum allows lenders get a more complete picture of their borrowers and make better decisions as a result, Patrick Reemts said.
Mr. Reemts is the vice president of credit risk solutions at ID Analytics, a provider of consumer risk management. Credit Optics Full Spectrum combines traditional and credit-relevant alternative data with proprietary analytics. It can serve as either a stand-alone credit score or as a companion score.
Credit providers find traditional credit assessment tools lacking when making credit decisions on thin file customers and millennials. Both groups often eschew credit cards and other products which are common components making up early credit histories. Credit Optics Full Spectrum utilizes cross-industry event and performance data from ID Network, ID Analytics’ network of consumer behavioral data, including sources such as wireless, cable and utility accounts, online marketplace, payday and subprime lending, alternative billing methods, and checking accounts.
Without such data lenders struggle to assess prime and near-prime consumers with conventional credit scores between 650 and 800, Mr. Reemts said. When loans are offered they are more likely come with higher rates due to the uncertainty being priced in.
Credit Optics Full Spectrum essentially offers new and profitable consumer pockets to lenders by identifying good bets from these groups by providing predictive scoring for three out of every four consumers with no traditional credit score. It also protects lenders by identifying declining credit quality patterns before they impact legacy scores, a factor which impacts both initial decisions and future portfolio management.
“This represents on of the largest product developments we have ever made,” Mr. Reemts said. “It is also not just for thin and no file borrowers but for those across the spectrum.”
But Credit Optics Full Spectrum does work particularly well with certain population segments, Mr. Reemts conceded.
“The millennial generation does represent our largest consumer base.
“Only one third have a credit card, so there’s a generational gap that old products are not addressing.”