The financial-technology firm Plaid Inc. is launching a credit-score service to provide banks and fintechs more detailed and timely information on consumers' financial health.
Plaid — whose services connect banks and fintechs — is launching LendScore, a rating that will range from 1-99 with a particular focus on helping lenders serving subprime and near-prime consumers, according to a statement Wednesday.
Real-time cash-flow data will be used to generate the ratings, unlike other scores that may present a delayed assessment of a consumer's creditworthiness. Traditional scores typically take into account factors such as payment history and age, as well as varieties of credit already utilized and to what extent. Cash-flow data is different, given its timeliness.
"If you get a new job and you have more income, yet your expenses stay the same, then you should qualify for a better loan rate," Plaid Chief Executive Officer Zach Perret said in an interview.
Fair Isaac Corp. has until now faced virtually no competition for its well-known FICO scores. But VantageScore Solutions, a venture by the three major credit-reporting firms,
Plaid said LendScore should be viewed as complementary to FICO scores and other traditional players in the space, but there could be room for disruption in the future.
Plaid's advantage in introducing LendScore is the extensive consumer data the company already has access to, given its network connections with financial-services firms.
Revenue from Plaid's new lending, payments and anti-fraud products has doubled in the past year, according to a person familiar with the company's financials.
LendScore can be used in tandem with traditional scores, and ratings can also be combined to come up with a weighted composite, according to the statement.
Plaid also has a
"Our view is that the cash-flow underwriting space is so nascent right now that there is value in working together," said Rich Franks, Plaid's head of credit.
