Alternative Data and its Use in Credit Scoring Thin- and No-File Consumers

On November 27, 2007, the Payment Cards Center of the Federal Reserve Bank of Philadelphia invited Jennifer Tescher, director, and Arjan Schutte, associate director, of the Center for Financial Services Innovation, to present a workshop. The Center asked Tescher and Schutte to share CFSI’s research on the developing role played by alternative payment data in evaluating risk for consumers with thin- and no-credit histories. After a discussion of thin- and no-file consumers and the challenges they face accessing credit, the speakers addressed aspects of supply and demand that are influencing the development of the market for alternative data. Several additional factors acting on this market were also examined: the costs and complexity of changes to IT infrastructure, legal and regulatory hurdles, and the broader economic impacts of extending the market for consumer credit.