With Cashflow Attributes, a new open banking solution, Experian, a business services company, credit score provider, and FinTech Magazine Top 10 consulting firm, hopes to provide equitable and inexpensive access to credit, especially for thin-file and/or credit-invisible individuals.

With the help of Cashflow Attributes, which is powered by 900 income, cashflow, and affordability attributes, lenders can easily incorporate banking data into their decision-making processes and gain cashflow insights.

Experian: Ways to increase financial inclusivity

Even though consumer credit reports are the best tool for determining lending risk, about 106 million Americans cannot obtain credit at mainstream rates because they are unscoreable or credit invisible by traditional standards.

Experian is able to enhance standard credit report data with Cashflow Attributes, giving lenders a more thorough understanding of a consumer's financial stability and creditworthiness.

Of course, giving customers additional options is the ultimate goal, and this is a fundamental component of Experian's business strategy as a credit bureau.

Experian explains the significance of its new Cashflow Attributes solution below:

Financial inclusion: 42% of adult individuals do not have a traditional credit score within the range that normally allows them to get ordinary rates of credit. With the use of data from checking and savings accounts, Cashflow Attributes provides a more thorough understanding of a person's financial profile. Customers who would not have qualified if a lender had only used traditional credit data on its own could now have chances thanks to the combination of traditional credit data and cashflow information collected from lenders.

Improved predictive accuracy: Cashflow insights alone can be predictive, but when combined with additional Fair Credit Reporting Act data and traditional Experian credit information, Cashflow Attributes can increase predictive accuracy by up to 20%, enabling lenders to increase revenue growth while lowering risk.

Customer willingness: According to Experian study, 71% of customers are open to disclosing their banking details to improve their chances of getting approved for credit.

Experian's new solution is obviously important, but how does it operate precisely?

The operation of Cashflow Attributes

Before requesting Cashflow Attributes, lenders must first give Experian de-identified transaction data from their current clients or account data from other banks that has been authorized by the client.

Next, Experian uses its in-house categorization model to analyze and classify the data. As a result, Experian can provide the lender with transaction categories and predictive features in a couple of seconds.

According to Scott Brown, Group President of Experian Financial and Marketing Services, "It is in our DNA to support financial inclusion and create an equitable path to credit."

"We think there is unrealized potential in banking data, and our new Cashflow Attributes are a promising advancement that can be seamlessly incorporated into lending decisions."

"We will keep using our core credit data, new data elements, and analytics expertise to unlock new opportunities for businesses and consumers as we look ahead."