Banks and mortgage funders are looking for more data to help them make lending decisions, beyond the simple matter of whether prospective borrowers pay their bills on time.
The focus on "alternative" data to credit scores in underwriting is not new but has intensified after the lessons banks learned from the credit bubble."
In the marketplace right now everyone is talking about rethinking underwriting," said Peter Carroll, a partner in the retail and business banking practice of the management consulting firm Oliver Wyman.
"Everyone realizes that credit scores, as clever as they are, have in some respects left out of the credit-assessment equation certain aspects of the borrower," Carroll said.
Though more data about people is available today than ever before, sifting through it is arduous.
"Basically people are saying we can either go back to human underwriting, which is cost-prohibitive and not that good anyway, or we can find data sources that potentially shed light on these other dimensions of the borrower," Carroll said.
