Cash Flow Scoring Is Catching On — Here’s Why Lenders Like It

To millions of Americans without a traditional score or stuck with one that misrepresents them, cash flow analytics opens the door. But cash flow underwriting didn’t quietly make its way into the spotlight — it kicked the door open.

Plaid estimates that cash flow data could bring nearly 19 million previously unscorable adults into the financial system. “It helps lenders extend credit to more customers,” the company stated in a recent analysis.

Access to alternative data — like cash flow information — can significantly expand the pool of potential borrowers. Subprime lenders traditionally rely on limited or low FICO scores, which exclude millions of credit invisible or thin-file consumers.

By using cash flow data, lenders can better assess a borrower’s real-time financial behavior, including income consistency, spending patterns, bill payments, enabling more accurate risk assessments.

Over the past year, what began as a tool for edge cases has exploded into the mainstream. Lenders fed up with flying blind on paper-thin credit files are now turning to cash flow data to get a clearer view.

“Cash flow scoring is becoming an equal to traditional credit scores,” said Jason Rosen, founder of Prism Data. “It measures altogether different financial information that’s generally more reflective of the population that most need credit.”

That alternate lens? It’s not just useful — it’s essential. Where credit bureaus see a void, transaction data can reveal signs of financial stability or distress with surprising clarity.

Cash flow scoring wasn’t conceived in a lab — it was tested in the field.

In 2016, Rosen’s team began rolling out models to underwrite Petal credit cards for consumers shut out of traditional credit. “We ate our own cooking before we opened a restaurant,” Rosen joked. That early experience paved the way for a more advanced system that no longer depends on one lender’s data.

Today, Prism’s models draw on data from dozens of institutions across asset classes, from small-dollar BNPL to mortgages. The score functions like a next-gen FICO — but looks at what your bank statement says, not what your credit file omits.

Focusing on income alone misses the bigger picture. Prism’s algorithms consider payment history, account stability, discretionary spending, and ability to save — all critical to understanding risk.

“Many people focus on income alone, but cash flow is the complete financial narrative,” Rosen said. He noted Prism tracks not just how much someone earns, but how regularly, and whether they’re consistently covering essentials or burning through funds.

That holistic approach is what leads Rosen to assert that Prism’s latest score produces a 30% increase in predictive accuracy when layered onto a traditional credit score. He’s not the only one making that claim. Experian reports up to a 25% lift using its own cash flow scoring model.

“Credit information can be complemented using cash flow insights to maximize decision-making and ultimately bring more consumers into the economy,” said Experian’s Financial Services President Scott Brown.

It’s not just about more approvals — it’s about safer ones.

First-party fraud, where a real borrower applies with no intention of repayment, is notoriously hard to detect with identity verification alone, Rosen said.

Cash flow scoring brings a new defense. Patterns like loan stacking, sudden income shifts, or erratic withdrawals surface early in bank data — often before they appear in bureau reports. “It’s hard to fake a normal-looking cash flow pattern,” Rosen added.

That approach tracks with recent academic findings that show that odd spending patterns — like sudden drops or out-of-sync deposits — can help spot potential fraud before it escalates.

Cash flow scoring isn’t just a new data source — it addresses structural tensions facing the lending industry. Traditional credit scores are under pressure from regulators pushing for broader inclusion and consumers demanding fairer, faster access.

Meanwhile, lenders are trying to grow portfolios without taking on excess risk or compliance exposure.

Cash flow underwriting opens doors for more consumers to access loans but also avoids risk.

Cash flow models strike a rare balance — improving predictiveness while helping lenders avoid risk creep. With nonprime and near-prime borrowers making up a growing slice of the credit market, better tools to serve them aren’t optional anymore — they’re vital.

Embracing this technology used to mean overhauling your infrastructure. Not anymore.

Prism has embedded its CashScore into platforms lenders already rely on — Equifax, Plaid, Taktile, Alloy, and others — making it accessible within familiar workflows. A single integration can yield both transaction data and scoring outputs.

Fintech Takes, an industry newsletter, recently dubbed Prism “likely the closest analog to FICO” in alternative scoring. That’s due in part to the scale and depth of Prism’s dataset, which now includes far more than its Petal roots.

Adoption is rising fast. “In the past 12 months, it’s increased astronomically,” Rosen said. “Cash flow underwriting is becoming commonplace, particularly in the near-prime and nonprime spaces.”

Rosen isn’t campaigning to kill the credit report. He wants to round out the picture.

“It’s a history of debt in the credit report,” he explained. “Cash flow accounts for the rest.”

Used together, the two offer a sharper view — helping lenders approve more applicants with less guesswork and fewer regrets. For borrowers without a score, or stuck with a misleading one, it’s a path to credit on better terms.

“Cash flow scoring gives lenders sharper tools to serve the right people — and gives underserved borrowers a real shot at fair credit,” Rosen said.

In an industry where win-wins are rare, this one might just hold. With tools like CashScore® v4 proving both scalable and predictive, the shift is already underway — one account at a time.