At the moment, unconventional data in CI is most interested in banks and other lenders. But data such as mobile phone payments, utility bills, and savings account information are also interesting for borrowers themselves. The interest in such data lenders is clear – they want to know everything about the client, especially how he handles money. But now borrowers also want to provide more information about themselves to the lender. They understand that this data can help them get a loan or better loan terms.
A study was conducted, correspondents interviewed reported that:
48% said they would not mind if the information on their utility payments was reflected in the credit history.
39% of respondents would be grateful if lenders would pay attention to the savings of borrowers and to maintain a savings account.
38% said they would prefer lenders to also look at their payments for Internet and mobile services.
At the same time, more than half of the respondents reported that their credit score would have only been won if unconventional data were used.
Alternative data can help people get credit.
Proponents of the use of alternative data have long argued that the inclusion of non-traditional information in the credit history can help many people who do not have CI, to obtain affordable consumer credit.
Sooner or later it may even help people who have a good credit history to gain access to cheaper loans and loans. This can happen because lenders will more carefully study potential borrowers and make better decisions in terms of issuing a loan.
Today, there are already several banks and companies that provide loans, while requesting only unconventional data.
Some Financial Specialists say that people will be more willing to provide additional information about themselves if they know that they can control the provision of this information to some extent. Simply put to give people the opportunity to decide whether to publish this or that information. But, in this case, you need to understand that the lender can negatively regard the fact that the borrower has hidden information about himself.
Of course, the system needs to be monitored and certain rules set. So, for example, how to understand a lender or even a borrower that exact data were used? Or how to understand the client when the bank refused a loan, which data he used to assess solvency. After all, even when a borrower is rated by a lender according to the traditional system, sometimes there are failures. Invalid data sometimes gets into the credit history, and some, on the contrary, do not end up in it.
Today, disputes about your CI are supported by law. If you find an error, you can remove it from the report by going to court. Protection of alternative data will also need to be consolidated by law.
As you know, today there are several credit bureaus and it happens that in each of them there can be different information about the same person. It might be wise to create separate bureaus to collect alternative information. Accordingly, the consumer will be able to control the data about himself, applying separately to each instance.
The result is this
It is certainly worth using alternative data, but they must be accurate. Nevertheless, a situation where many people cannot receive funding due to a lack of information about them should be exhausted.
Many consumers will agree to the use of additional information by banks, but to get more opportunities to get a loan. But it is unlikely that many will like it if they do not know that the creditor uses information about them without their knowledge.
Alternative data may be a useful tool for obtaining additional information about borrowers, but there is also concern that in some cases this data may do more harm than good if borrowers do not have a reasonable way to regularly monitor all information that lenders use.