Big Data, Digital Footprints, and Credit: Looking To The Future

People seem to view their credit score as sacred; they’ve cultivated the number for years, check its progress every few months, and pray it doesn’t dip too low. If you want to own a home, qualify for a good home insurance rate, finance a new car, or even sign an apartment lease, there’s a good chance the score serves as a gatekeeper to these experiences.

This is because companies need to quantify client risk. And, credit scores have served as a solid predictive model for decades.

But a new study by the National Bureau of Economic Research has found that credit scores aren’t the only indicator of credit risk – your digital footprint might work as well. The research paper called On the Rise of FinTechs Credit Scoring using Digital Footprints by Tobias Berg, Valentin Burg, Ana Gombovic, and Manju Puri tested a different approach: instead of the using credit bur ...

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