Launch of Experian’s Cashflow Score Signals New Era of Open Banking-Powered Lending

New solution leverages consumer-permissioned transaction data to enable more informed credit decisions and help increase financial access

COSTA MESA, Calif.--(BUSINESS WIRE)--In a move to help lenders more easily leverage consumer-permissioned transaction data, Experian^® today announced the launch of Cashflow Score. The solution is the latest in a short list of products that may be used to make lending decisions and provides up to 25% lift¹ in predictive performance when compared to conventional credit scores.

Experian’s solution can easily integrate into existing workflows alongside traditional credit scores — providing lenders with a clearer view of an applicant’s financial behavior, including income, expenses, cash reserves and more. In addition, Cashflow Score may be used in first and second-chance credit decisions for individuals with limited or nonexistent credit histories to help improve financial access using only bank account data.

“We believe in a future where the power of credit data can be augmented with cashflow insights to enhance decisions and ultimately bring more consumers — including those who are traditionally underserved — into the financial ecosystem,” said Scott Brown, Group President Experian Financial and Marketing Services. “We’re committed to leveraging our decades of data and analytics experience to deliver innovative and easy-to-use open-banking solutions to the industry while creating new opportunities for consumers.”

The challenge and Experian’s solution

Lenders often hesitate to extend credit to thin file or credit invisible consumers and nearly 20% of American adults don’t have a conventional credit score, according to Experian’s research.² However, most consumers in the U.S. have a bank account, and cashflow insights has proven to be indicative of credit risk. Leveraging these insights can help lenders make more informed decisions, particularly for thin file and credit invisible consumers who have a bank account.

While interest in using banking transaction data in conjunction with credit data for lending decisions is growing, many lenders face limited analytics capabilities and resources, highlighting the need for intuitive, easy-to-use scoring solutions that analyze both types of data effectively. Those that are leveraging cashflow insights and credit data often face logistical challenges in working with multiple vendors.

As the only financial services company offering both traditional credit scores and cashflow-based scoring analytics solutions developed in-house, Experian is uniquely positioned to provide credit scores and transaction data insights.

How Experian’s Cashflow Score works

Experian’s new Cashflow Score leverages consumer-permissioned transaction data provided by its clients. From there, Experian, acting as a technical service provider on behalf of its clients, categorizes the transaction data and calculates attributes that are used to derive the score, which is delivered back to the lender.

The score ranges from 300 to 850 and can be used to make decisions across credit cards, personal loans, auto loans, and more.

Lenders leveraging the new score can benefit from Experian’s long track record of delivering predictive scores and financial insights to the industry. The debut of Cashflow Score is the latest in a string of innovative tools that support more inclusive lending practices, including Cashflow Attributes and its newly launched Cashflow Dashboards for immediate insights into cashflow and traditional credit data. These solutions are powered by Experian’s industry-leading categorization model, which is validated on an ongoing basis by expert data science and annotation teams to ensure accuracy and reliability.

To learn more about open banking at Experian, please visit https://www.experian.com/business/solutions/data-solutions/open-banking-solutions.

About Experian

Experian is a global data and technology company, powering opportunities for people and businesses around the world. We help to redefine lending practices, uncover and prevent fraud, simplify healthcare, deliver digital marketing solutions, and gain deeper insights into the automotive market, all using our unique combination of data, analytics and software. We also assist millions of people to realize their financial goals and help them to save time and money.

We operate across a range of markets, from financial services to healthcare, automotive, agrifinance, insurance, and many more industry segments.

We invest in talented people and new advanced technologies to unlock the power of data and innovate. As a FTSE 100 Index company listed on the London Stock Exchange (EXPN), we have a team of 22,500 people across 32 countries. Our corporate headquarters are in Dublin, Ireland. Learn more at experianplc.com.

¹ Based on Experian analysis when Cashflow Score is compared to conventional credit scores, tailored to targeted risk tiers. Predictability based on KS.
² https://www.experianplc.com/newsroom/press-releases/2022/experian-and-oliver-wyman-find-expanded-data-and-advanced-analytics-can-improve-access-to-credit-for-nearly-50-million-credit-invisible-and-unscoreable-americans