- CBA on
- CBA Media
CFPB Explores Impact of Alternative Data on Credit Access
On Thursday, February 16, 2017, the CFPB released a request for information aimed at expanding access to credit for consumers using alternative data sources. Traditional credit histories, which include information such as a borrower’s debts payments for mortgages, credit cards, and other loans, are used by lenders to decide whether to extend credit to an individual and at what cost. The Bureau estimates 26 million Americans are “credit invisible,” meaning they have no credit history, while another 19 million have a credit history insufficient to produce a credit score.
The Bureau addressed this issue at a field hearing Thursday on the subject, where CFPB Director Richard Cordray noted how “alternative data from unconventional sources may help consumers who are stuck outside the system build a credit history to access mainstream credit sources”. Panelists at the field hearing echoed the potential for alternative data sources to build access to credit, but cautioned the Bureau to be cautious of the various risks and concerns created if the Bureau were to mandate what types of data could be considered and collected.