Making Alternative Credit Scores the Norm: How to Create a New Scoring Model

The way we currently measure potential borrowers’ and other customers’ creditworthiness is broken. The credit scores that have become the gold standard are narrow, opaque, and easily manipulated measures that reward financial risk-taking and ignore responsible behaviors. Is there a better way to measure creditworthiness? It starts with using data that can provide a broader picture of borrowers’ financial behavior and responsibility. Then it’s all about building credit models that look at more than just how much borrowers have borrowed in the past. This whitepaper discusses why the current credit scoring model is outdated and in need of an upgrade, the alternative data that offers a better understanding of customers, and how to go about building smarter, more accurate credit scoring models.