Alternative lending

Financial regulators’ statement cautiously encouraging lenders to go beyond traditional underwriting in their lending decisions is a big step forward for the use of alternative data and artificial intelligence, bankers say.

Casting aside recession fears, the credit bureau predicts credit cards, mortgages, auto loans and unsecured personal loans should all perform well — including those extended by online lenders.

Casting aside recession fears, the credit bureau predicts credit cards, mortgages, auto loans and unsecured personal loans should all perform well — including those extended by online lenders.

Alternative data "may improve the speed and accuracy of credit decisions and may help firms evaluate the creditworthiness of consumers," the agencies said.

The online platform lender Kabbage is making the move beyond just providing working capital loans to small businesses, putting it in direct competition with alternative acquirers and payment companies.

Renaud Laplanche, one of the first fintech disruptors, is launching an unusual type of credit product at Upgrade, his new company, that is a cross between a credit card and an unsecured loan.

Freddie Mac's test of artificial intelligence to make lending decisions could be a significant turning point in broadening the use of the technology.

Alternatives Federal Credit Union is making loans to pay for gender-reassignment surgery, but the initiative has bothered some members.

The Upstart Network, the first and only startup to participate in the bureau’s program for promising digital platforms, claims that using nontraditional credit data items has helped loan volume and affordability.

Though the use of alternative data in lending is seen by some as untested, several fintechs say they couldn't function without it.

Readers react to Capital One's massive data breach and The Bancorp's expansion in CRE securitizations, defend fintechs offering retirement plans and more.

The bill, similar to legislation that passed the chamber last year, would permit the inclusion of items such as rent and telecom payments to help consumers build their credit profiles.

A study by FinRegLab of six nonbank lenders' use of cash-flow data in underwriting decisions finds this type of "alternative data" helps predict loan performance.

Since last fall, when the value of digital money plummeted, lenders have been pushing people who have paper profits to leverage them into cash by borrowing against their cryptocurrencies. And the fact that there's no tax bill on the transactions is a big selling point.

Some fintechs have figured out how to provide international students and immigrants with credit cards and loans. Machine learning makes the underwriting possible.

The tricky part: raising awareness without appearing to take advantage of borrowers at a time when agencies like the SBA are out of commission.

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CU*Answers is working with VantageScore, and now its institutions will be able to get additional information on members' credit history.

A paper released by the agency’s Center for Financial Research says aspects of someone’s digital footprint — including whether they use Apple or Android — help predict likelihood of default.

Allowing alternative data such as rent and utility payments has bipartisan support, but some say it could create more problems than it solves.