Improved risk score solution allows lenders to broaden their reach by accurately scoring consumers with little to no formal credit data
Information and insights company TransUnion Philippines has launched CreditVision™ Link – the one-stop solution capable of credit scoring Filipino adults using alternative and traditional credit data. With a proprietary scoring model, validated against financial behavioral data and standardized in a single API, the new CreditVision Link solution provides lenders with an enhanced ability to provide credit to millions of potentially valid consumers who may have previously been unscorable.
Credit Scores: The Importance of Representing the Credit Invisible
Traditionally, credit scores are values derived from formal credit data that utilize statistical methods to help predict an individual’s capability to pay back a loan. For Filipinos, a good credit score helps enable access to financial opportunities that can lead to a higher quality of life. For financial institutions, the use and availability of a credit score helps potential lenders determine how much to responsibly lend and how much interest a customer will pay to borrow money or secure a loan.
Despite ongoing increases in financial inclusion, over 50 million Filipinos1 remain unbanked, with 45% of the unbanked population resorting to borrowing money from non-bank sources – mostly family and friends. With these “credit invisible” consumers left with limited to no access to formal credit, lenders are faced with the dilemma of having insufficient visibility into a potential customer’s risk profile – and are forced to reject the majority of them due to a lack of insight.
CreditVision Link adds another layer of assessment by utilizing alternative data sources like telco (mobile phone) data, including reloads, payments, mobile data usage, and device data. With this technology, lenders can expand their reach by accurately scoring even consumers with little to no formal credit data. This enables faster and easier processing of applications, helping to optimize acquisition strategies by gaining a more holistic view of new-to-credit (NTC) consumers.
“TransUnion’s commitment to financial inclusion in the Philippines is central to everything we do. We are focused on providing financial institutions with solutions that will enable them to support even more Filipino consumers. Through access to rich insights, lenders can increase acquisition volumes and better protect against fraud, all within their own defined risk appetites,” said Pia Arellano, President and CEO of TransUnion Philippines.
“CreditVision Link is the result of our continuously expanding database which includes alternative scoring partners and traditional credit bureau data to accurately represent even unbanked Filipinos, who comprise a majority of the population. This solution benefits consumers and businesses alike and has the potential to build greater economic momentum in our country,” she added.
Information for Greater Financial Inclusion
For consumers, access to financial services is often essential when looking to achieve their goals and access new opportunities – regardless of their current standing. However, for unbanked consumers, more novel and comprehensive approaches to credit scoring and risk assessment are needed to help them access formal, higher quality and more inclusive financial services.
1Bangko Sentral ng Pilipinas 2019 Financial Inclusion Survey
“When lenders are able to offer consumers with a limited or no formal credit history a line of credit, it creates an opportunity to build lifetime loyalty. To do so, access to the best information and insights is critical,” said Ela Reyes, Solutions Group Head for TransUnion Philippines.
“The topic of financial inclusion has never been more important. As the Philippines looks to recover from COVID-19, economic growth will, in part, be fueled by peoples’ access to credit. We’re focused on creating and introducing new more powerful tools for financial inclusion. Access to new and expanded insights is a determining factor in the extent to which different segments of the population can participate in the formal financial system. CreditVision Link, with its depth and breadth of traditional and alternative data, allows businesses to facilitate smoother transactions, and allow more consumers access to the financial services they need,” she added.