Alternative credit data case study: Top-ten card issuer uncovers credit invisibles

by Kevin King

Kevin King

Almost one-fifth of adults in the United States face obstacles to obtaining credit because they are considered “credit invisible”—meaning they either don’t have a credit history with, or are treated as unscorable by the nationwide consumer reporting agencies. Leveraging alternative credit data has increasingly become a mainstream answer to the challenge of identifying more creditworthy consumers who are credit invisible.

For more than a decade ID Analytics has developed machine learning models which provide enterprises with a predictive assessment for nearly every credit-seeking U.S. consumer. Our flagship solution, Credit Optics® Full Spectrum, combines both traditional and alternative credit data, including wireless, sub-prime loan and alternative payment applications, into a single holistic assessment of consumer creditworthiness.

To demonstrate how applying the right alternative scoring model could increase account activation rates for credit invisible consumers, we analyzed the portfolio of a top-10 U.S. credit card issuer. The case study revealed that 40 percent of the non-booked credit invisible population in this portfolio were credit eligible based on the card issuer’s credit policy (see Figure 1).

Figure 1. Results of a top-10 credit card issuer’s use of alternative credit data to uncover credit eligible invisible consumers

Of course, identifying which four of every 10 invisibles you consider credit eligible requires not just a solution which scores a high percentage of these consumers – it requires one which delivers a strong, predictive credit assessment. For many lenders, credit invisible consumers are how they first apply alternative credit data to their lending models, before expanding their use of these powerful insights across their full, credit-visible applicant pool.

A recap of this analysis, Leveraging Alternative Data to Uncover Hidden Growth Opportunities, provides case study examples of the benefits of using alternative data insights to inform underwriting decisions on a range of different consumer segments, in turn helping enterprises drive portfolio growth while tightly managing risk.

If you will be at Card Forum 2019, please join me for an industry innovation lunch session on Wednesday, May 22, from 12:45-1:45 when I will present the state of alternative credit data in the U.S. I will provide updates on emerging opportunities for card issuers regarding the use of alternative credit data to assess credit invisibles, support prescreen and portfolio management and fine tune competitive lending strategies.


Kevin King is Director, Product Marketing at ID Analytics