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Credit Scores and Reports

Experian’s new credit score considers trended data, professional licenses

The credit bureau’s new Experian Lift product will be available to lenders in early 2020

Summary

Experian announced its new Experian Lift product will combine traditional credit scoring data with other factors such as how you use credit and how much of your balances you pay each month. It will be available to lenders early next year.

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Experian is rolling out a new scoring formula that will use trended data and other nontraditional factors to help thin-file and “credit invisible” consumers.

The credit bureau on Nov. 7 announced its new Experian Lift product will combine traditional credit scoring data with other factors such as how you use credit and how much of your balances you pay each month. It will be available to lenders in early 2020, Experian said.

Experian said Lift would also allow lenders to gauge the creditworthiness of consumers with little or no credit history by reviewing information such as alternative financing data, rental payments and full-file public records, including professional licenses.

The bureau claims its new formula increases predictive performance by 23 percent compared to other scores used to assess credit-invisible consumers.

See related:  Busted: 5 myths about alternative credit data

The trended data trend

The three major credit reporting bureaus – Experian, Equifax and TransUnion – began adding trended data to consumers’ credit reports about seven years ago. This information gave lenders a broader view of consumers’ payment histories, including whether or not they typically paid off their card balances in full or incurred interest charges.

However, the only major credit scoring formula that uses trended data is VantageScore 4.0, which was introduced in 2017.

FICO’s most commonly used credit scoring model – FICO 8 – uses traditional data, which provides a “snapshot in time” of a consumer’s credit profile. FICO has been reluctant to adopt trended data, but it has embraced the use of alternative data such as utility bill payments through its FICO XD score.

Greg Wright, vice president of consumer information services at Experian, said in a news release more than 100 million consumers are “restricted” by traditional scoring methods.

“Knowing how a consumer is managing credit at a single point in time only tells part of the story,” Wright said. “By looking at historical payment information through our trended data attributes, we can see how a consumer uses credit, or pays back debt over time, to create a more accurate risk profile.”

Earlier this year, the credit bureau released Experian Boost, which allows consumers to have their on-time utility bill payments incorporated into their credit scores by providing the bureau with access to their bank account information.

What’s up next?

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Published: November 7, 2019

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