By: Phil Mulkins
July 20, 2012
Experian announced June 13 it was introducing a new credit score - the "Extended View Score" - developed exactly with you in mind. "To help identify and assist the underbanked population," now accounting for one-fourth of the U.S. population (nearly 64 million consumers) who have limited or no traditional credit history. This new score will help lenders expand their lending universe and will help consumers receive credit products and services that the credit reporting bureaus can track and report on.
Underbanked: The scoring system is "a highly-predictive score designed to assess the creditworthiness of consumers who have little or no traditional credit history" - typically referred to as "the underbanked" or "the unbanked." The Federal Reserve Bank of Kansas City published "A study of the unbanked and underbanked consumer in the 10th Federal Reserve District" in May 2010 ( tulsaworld.com/10thFedResDistUnderbanked). It found Oklahoma (with 31.6 percent unbanked or underbanked) was second to northern New Mexico with 33.1 percent. Five other states ranged from 27.6 percent to 20.2 percent.
Underbanked forum: The "Seventh Annual Underbanked Forum" held June 13-15 at the Westin St. Francis Hotel in San Francisco and attended by more than 330 CEOs of major banks, check-cashing firms, savings and loans, consumer groups, credit unions, thrifts, social services agencies, etc. To attendees, it offered "the story of underbanked Californians and how they are using innovative products to spend, borrow, save and plan for the future. It featured videotaped interviews and consumer snapshots, followed by a Q&A session with highlighted innovators. It demonstrated firsthand how financial innovations in the underbanked space are transforming consumers' lives and opening new opportunities to those willing to enter and serve the space. Experian, a leading global information services company, announced its Extended View Score to forum attendees.
Extended View: The credit score system ( tulsaworld.com/ExperianExtendedView) is a proprietary credit score developed by Experian including three unique data sources: Experian's credit data, rental information and public record data. It provides a comprehensive view of a consumer's payment behavior and is delivered to financial institutions by Experian, streamlining the loan review process, enabling lenders to expand their underwriting population and offering the underbanked financial products for building credit histories.
"Experian is committed to helping consumers establish and build credit. Many of the estimated 64 million consumers with limited to 'no credit history' are not scorable through traditional credit scores but are still creditworthy," said Steven Wagner, president of Experian Consumer Information Services. "Extended View can redefine how businesses evaluate this underserved population and empower more consumers with cost-effective credit and financial opportunities."
Experian research shows 30 percent of the underbanked population displays similar behaviors as low-credit-risk individuals, indicating that 20 million underbanked consumers are eligible for financial products normally reserved for prime credit prospects. These include individuals new to credit, those who are new to the United States, consumers leery of the lending market or even individuals who have satisfied previous credit obligations but now live on a cash basis. Most of these people work and receive paychecks that they pay check-cashing services to process and pay bills with.
Lenders & utilities: Extended View score is ideal for a variety of lenders, including banks, credit unions and auto lenders, who want to confidently enhance their underwriting strategies to the underbanked market segment. The score is also beneficial to telecommunications companies and utility providers, giving them the ability to determine the deposit terms required for new customers.