Consumers Embrace Sharing Account Payment History for Credit Decisioning

Data is becoming an increasingly important part of the financial services industry, both for lenders looking for new ways to enhance credit risk decisioning and for consumers looking for ways to improve their creditworthiness. Thus, the recent trend towards permission-based data sharing and the rise in consumers’ willingness to share account payment history with lenders will be critical steps in the evolution of lending and underwriting. Let’s take a closer look at these trends. 

Consumers are now more inclined to share account payment history

While the desire to enhance the traditional credit decisioning process isn’t new, the pandemic’s onset has amplified the need for changes and the incorporation of alternative data. As the economic forecast remains uncertain, consumers are growing concerned about the impact the current climate and widespread unemployment will have on their credit. As a result, they’re now more open to sharing their account payment history, so that they can provide lenders with more insight into their payment ability and open the door to better interest rates.

According to a Finicity survey, 86 percent of consumers believe that they should have more control and insight into the information lenders use to assess their creditworthiness. To that end, 66 percent are willing to share their current income, 65 percent are eager to share their utility payment history, and 54 percent are open to sharing their rental payment history with a lender. 

65% of consumers are eager to share their utility payment history with lenders in order to improve their creditworthiness.

In addition to wanting more control over the data used for credit risk evaluations, consumers also desire a more seamless and accurate application process. With digital access to consumer-permissioned data, that can become a reality.

Consumers want more personalized services and better offers from banks

Thanks to the accelerated adoption of digital banking during the pandemic, businesses and consumers have changed the way they interact with financial institutions. In particular, consumers are seeking more tailored banking services. A survey conducted by Citizens Financial Group showed that 60 percent of consumers were comfortable sharing their personal information with their banks to improve their experiences and receive more personalized solutions. 

60% of consumers are comfortable sharing their personal information with their bank to improve their experiences and receive more personalized solutions.

Businesses are also on board with receiving better and tailored offers from their banks – they even expect their information to be shared by banks and third parties. 73 percent of businesses that responded to the survey stated that their banks should be making informed and customized recommendations to them based on the information that they have about their business.

Consent-based data benefits financial institutions and customers

When consumers have full control over their personal data and who has access to it, they can improve their financial wellness. As for financial institutions, Equifax asserts that it can expand the market with consumer-permissioned data by enabling lenders to identify more creditworthy borrowers. Incorporating this data into credit risk decisioning empowers an estimated 5.5 million U.S. consumers – allowing them to move up from unscorable or subprime credit scores and pursue financial freedom. 

In the future, consumer-permissioned data will become the backbone of the financial ecosystem.

A LendingClub report stated that in the future, consumer-permissioned data will become the backbone of the financial ecosystem – granting consumers new experiences, better-designed services and products, and better outcomes.

 

LEARN HOW TO MEET CONSUMER AND ECONOMIC DEMANDS WITH ALTERNATIVE DATA

 

Reshape credit decisioning with account payment history

Utility and rent payment histories are an important source of alternative data, and they can help empower consumers by improving their credit standing. By incorporating this data into credit decisioning, financial institutions can also benefit by developing tailored offers for a larger pool of qualified applicants. Urjanet’s alternative data platform provides consumer-permissioned access to utility account payment history from thousands of utility and telecom providers across the globe to help lenders enhance their credit scoring models. 

Interested in updating your approach to credit risk assessment? Request a demo of our alternative data solution today.

You might also be interested in:

• White Paper: Building a Better Future with Automated Access to Alternative Data
• The Impact of Reporting Everyday Expenses on Credit Scores
• 3 Ways to Assess Credit Risk with Utility Payment Data

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