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Alternative Credit Scoring in the US: Innovators Applying Data Science to Unlock Financial Potential of ‘Thin-File’ Individuals

Over the past 10 years, over a third (34.2%–36.9%) of the US population has been steadily categorized as having a subprime credit score (<620, which is considered to be a bad credit score). Among millennials, close to 60% have a FICO credit score that is either fair or poor. And even that part of the population should be considered ‘lucky’ in comparison to those not having a credit score at all. Meanwhile, credit score scales are used for all lending decisions in the formal financial sector, creating certain hurdles for subprime categorized population and those fully excluded from the formal sector.

In 2015, there were 26 million credit invisible consumers in the US, according to the report by Consumer Financial Protection Bureau (CFPB). Moreover, the estimates suggest th ...

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