There was some variation in what data was considered alternative, according to FactorTrust’s Alternative Data Survey Results.
Overall, the definition of alternative data was quite unanimous as “credit related data not found on the traditional three credit reports,” according to the June survey. For example, FactorTrust, LexisNexis, Clarity, TransUnion L2C, TransUnion TLO, Equifax, The Work Number (Verification Services), Equifax National Consumer, Telecom & Utilities Exchange (NCTUE), and Check Advisor are some of the sources that provide alternative data, the report said.
Among the 32 subprime auto finance sources surveyed, 17 are currently using alternative data and two are currently in the process of implementing alternative data. Additionally, four are testing the data and are still in the process of exploring how the data will be utilized, and nine are planning to explore use of the data, according to the results.
By using alternative data, online lenders can not only check the traditional credit report but also find other information — as long as the customer is willing to provide that data. For example, alternative data is mainly used for underwriting purposes, with public records being most common type of alternative data and scorecards the most commonly used.
However, there are some obstacles to using alternative data, the report said. Around 40% of users think that “prioritization of IT resources/projects” is the biggest obstacle, while 20% believe regulatory is the main obstacle. In addition, the “integration to LOS” and “vendor management” are also obstacles to be overcome, the report said.1 - Reader Likes This Post