Experian Unveils Credit + Cash Flow Score, Transforming How Lenders Judge Risk

Millions of Americans are operating outside the traditional credit system. This means that lenders are often unable to view the complete picture. That has changed with the development of Experian’s Credit + Cash Flow Score, which the company rolled out on Nov. 10.

It’s evidence that new types of data are quickly causing shifts in lending. What this means to subprime lenders is that it may change how subprime lenders assess consumers who live paycheck to paycheck or those who use cash instead of credit cards. It may open doors to better loan terms for those who don’t have good credit.

This is more than a score update. It’s a full shift in how lenders judge risk. It mixes real-time money data with credit history. Experian can now give lenders a better picture of financial health. Fairness and accuracy are important for subprime borrowers.

The Credit + Cashflow Score adds more layers to what Experian has already built. It uses:

• Standard Credit reports on more than 220 million U.S. consumers
• Clarity Services data to keep tabs on nonprime borrowers
• Bank account info people choose to share, including income, balances, and bill payments
• Two years of credit trends that shows how borrowers handle debt

This mix makes the new model about 40% better at predicting risk. It also uses a range of 300 to 850 —familiar for lenders and borrowers alike. That means a person with a steady income and on-time rent/utility payments can now look like a safe bet. This is true even without a long credit record.

Scott Brown, Group President of Experian Financial and Marketing Services, said, “Leveraging Experian’s world-class data with information about how a consumer is managing their finances through open banking is the future of underwriting.”

This launch is the culmination of a year of steady progress. First came the Cashflow Score, which helped lenders see how applicants use their bank accounts. Then came the Plaid deal that added real-time data from more than 12,000 banks.

In the summer, Experian added rental payment data to its Connect System, which means that on-time rent payments will help increase the credit scores of borrowers.

Each step increased credit access to nonprime borrowers. All that work comes together in one score that plugs right into lenders’ existing systems through the Ascend Platform.

This new score helps lenders approve more loans without taking on extra risk. Borrowers who save their money and pay their bills on time will now get better terms. That’s a big change.

Older models punished consumers with little credit history and/or uneven income. These are the very people who need help the most. Experian gives lenders a fuller read on who’s likely to repay because it includes real bank behavior and Clarity data.

This can help lenders approve more loans and decrease early defaults. It will also help meet community lending goals. Better information assists lenders in building stronger portfolios while giving borrowers fairer access.

Experian’s Credit + Cashflow Score pulls together everything from rent data to open banking into one simple number. It’s a big step toward data-based lending — money habits now matter more than credit history.

Experian has a sharper tool for subprime lenders to hook up with reliable borrowers. This is another chance for millions of credit-challenged Americans to build a better future.