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Current Regulatory Challenges In Consumer Credit Scoring Using Alternative Data-Driven Methodologies, Sahiba Chopra

Vanderbilt Journal of Entertainment & Technology Law

Credit is a crucial determinant of financial success for most US consumers, but not all consumers can access it. This financial exclusion is partially due to traditional credit-risk scoring and approval processes that cannot assess the creditworthiness of “credit invisible” or “thin file” consumers––that is, consumers who do not have enough traditional data depicting their financial payment history. Consequently, some consumer-reporting agencies and lenders turn to alternative data credit-scoring systems as a way to increase financial inclusion. The enormous complexity of these alternative consumer credit-scoring systems, however, raises significant accuracy and transparency issues—most of which stem from their secret, legally …