Delving Into 'Thin File' Borrowers

LAS VEGAS - Credit union expansion into underserved markets can be seen in the companies offering credit bureau information that are following them there. During CUNA's America's Credit Union Conference here, several vendors were on hand with solutions aimed at resolving a challenge in serving low-income people: incomplete or even absent credit bureau files. TransUnion, for instance, estimates that between 35 and 54 million Americans are outside the credit system.

Linda Moynihan Vance, VP-Credit Unions with TransUnion, said the company has introduced the "L2C Thin File Model," which uses alternative data and tradelines to score more consumers. L2C can "measure risk in areas where not been measured in the past: people who are young to credit, payday borrowers, immigrants. This can help credit unions to serve these populations in some markets."

Vance said approximately 20% of consumers do not have enough information on file to have a credit score.

Similarly, spokespersons for Teletrack in Norcross, Ga., which is a credit bureau for subprime lenders and which tracks data from those firms plus Rent to Own outlets, pawn shops and others, said it can fill in the blanks with members who do not have a credit file with the big three bureaus. One surprise for credit unions, according to Teletrack: between 18% and 22% of current credit union members have borrowed money from a payday lender at last once.