The role of alternative credit data in economic recovery

by Ken Meiser

Ken Meiser

The U.S. economy has experienced dramatic changes over the past several months. The temporary closure of non-essential businesses and ensuing loss of livelihood has created uncertainty for both businesses and consumers.

Federal and state government programs have enacted measures to help with the quick and unexpected crisis. On March 27, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law to provide economic assistance to American workers, families and small businesses.

One portion of the CARES Act amended the Fair Credit Reporting Act (FCRA) with a provision that when a credit issuer agrees to defer payments, forbear a delinquent account, or make other accommodations to a consumer impacted by the pandemic, and the consumer complies with the terms of such accommodations, the credit issuer must report that account as current to consumer reporting agencies.

The Consumer Financial Protection Bureau (CFPB) issued a policy statement that addressed the reporting of consumer credit data during the pandemic. The statement encouraged institutions to work constructively with consumers facing financial hardship.

These measures help consumers from being negatively impacted by things beyond their control and are an important step toward economic recovery. ID Analytics, SageStream, and LexisNexis® Risk Solutions support financial inclusion and measures that help consumers gain access to credit. Our newly combined organizations have unique insight into U.S. consumer credit behaviors that allows us to better understand how current economic changes might impact businesses and consumers.

We are committed to meeting our obligations under the CARES Act while working with our clients to provide effective credit scores. One of the clear implications of the changing credit risk landscape is the imperative for organizations to regain clarity on credit risk by obtaining a more complete picture of consumer creditworthiness. Insight through alternative credit data will be increasingly important as the country emerges from the crisis and looks to bolster financial inclusion.

On August 11, we are teaming up with American Banker for a live web seminar, Regaining Confidence: Assessing the role of alternative data in a changing credit landscape. Hear new research by ID Analytics and LexisNexis® Risk Solutions that evaluated the role of specific alternative credit insights and non-credit events in re-establishing a clear view of consumer behavior following the recent economic turmoil.

Ken Meiser is chief compliance officer at ID Analytics a LexisNexis Risk Solutions Company

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