Imagine the combined populations of Canada and the United States having no access to lending opportunities because they have insufficient data profiles and you have an idea of the size of the need in India, Dave Shellenberger said.
Mr. Shellenberger is FICO’s senior director of scoring and predictive analytics. He said FICO has introduced a pair of tools to help people in India participate in the financial system. FICO® Score for India employs data from major credit bureaus and assesses consumers with traditional data. FICO® Score X Data India uses data from different sources with consumer consent so lenders can provide credit to those previously unscorable. It is produced in partnership with Lenddo.
Hundreds of millions of people in India lack any credit file, while millions more have files that have gone cold or that are sparse, Mr. Shellenberger said.
“It’s a significant issue to score out more consumers and allow lenders who are trying to bring more people into mainstream banking with traditional credit products.”
Big changes are happening in India. A well-educated middle class is emerging, and many people are flocking to the cities in search of opportunities. Many will want to participate in the economy. If they have sufficient information, great.
Mr. Shellenberger said the credit bureaus in India are fairly robust, with both positive and negative reporting, so the FICO Score for India can help lenders determine risk.
Others may discover they cannot provide enough information to satisfy lenders. In those situations FICO partners with Lenddo, who has worked with alternative financial data since 2011. That data helps determine stability, which correlates nicely with credit risk, Mr. Shellenberger said. The age and activity levels of social media and email accounts and utility bill payment history are also considered.
The need for alternative data sources is also high here at home, Mr. Shellenberger said. He estimates 190 million consumers can be scored using traditional data while 53 million are deemed unscorable at any one time due to semi-complete files or no hits whatsoever. Many of the tools that are successful elsewhere can also be employed in the United States .
“We can assess the risk of more than half of those that were once deemed unscorable,” Mr. Shellenberger said. “Around the world more than three billion people are underbanked, and if we can identify those who are creditworthy we can create a much better lending system.”