The CFPB is currently requesting feedback on the potential and risks of using alternative data sources to determine credit scores for financial products. Alternative data sources include rent payments, utility and cell phone bills and other non-traditional credit scoring methods.
The potential rule is seen as a bridge to introduce the millions of underbanked and credit invisible Americans to traditional financial products previously out of reach due to poor credit or no credit at all. In particular, the CFPB seeks information and comment on the likelihood that the use of alternative data sources to score credit would improve access to capital, how the use of alternative data sources might burden the industry with complexity, and whether the proposed rule might impact certain demographics. Last year, the Obama Administration issued a report on the potential for alternative data sources in accessing affordable credit.