Experian Rolls Out Credit Scoring for Non-Prime Consumers
Experian, one of the three major credit bureaus in America, took advantage of its recent acquisition of Clarity Services, a leading provider of non-prime credit data and reporting, by announcing a new credit report for subprime consumers called the Clear Early Risk Score. Noting that small dollar loans have increased in size by 17% since 2016, the new scoring system should “[expand] early risk insight for lenders [and] translate into improved access to credit for responsible borrowers.”
Last year, the Consumer Financial Protection Bureau (CFPB) requested information regarding a potential rule to use alternative data to help develop credit scores for underbanked Americans. Credit score can be a strong factor in determining whether or not a person secures a conventional loan. 188.6 million Americans have credit records. However, about 20% of American adults are either credit invisible (no data available to determine credit score) or unscorable (not enough data available to determine credit score).
2017 was an interesting year for the three main prime credit bureaus, Experian, Equifax, and TransUnion. As Experian acquired Clarity and expanded its reach to another 60 million consumers, Equifax experienced a security breach that leaked sensitive data for more than 140 million Americans. In response, former CFPB Director Richard Cordray proposed onsite monitoring at the credit bureaus. TransUnion was hit last summer with a $60 million verdict for violations of the Fair Credit Reporting Act.
