Your digital profile to affect credit score

It is not just your older loans or credit card repayment history that is being used to decide whether you should or should not get a loan. Increasingly, alternative data-based credit scores are also being used to arrive at a lending decision, not just by fintech companies but also by banks and non-banking financial companies (NBFCs).

One of the four operational and licensed credit bureaus in the country, CRIF High Mark, recently announced a tie-up with CreditVidya, an alternative data-based credit assessment platform. Abhishek Agarwal, CEO and co-founder, CreditVidya said that over 40 lenders, including banks, NBFCs and fintech companies are currently using the company’s alternative data-based scoring model. “We have observed that our model enabled a 15% higher loan approval rate for applicants having a score from credit bureau, compared with traditional methods of underwriting. The scoring also ensures 33% lower delinquencies for the same level of risk,” he said. Let us take a look at what this alternative data is and how is it being used.