The document highlights the growing reliance of lenders on alternative data beyond traditional credit reports, with 80% of lenders using such data to improve credit decisions. Key benefits include assessing consumers' ability to pay, providing underwriting insights, and expanding the customer base, while 78% agree it allows credit extension to previously denied individuals. The main barrier to utilizing alternative data is regulatory constraints, with a significant portion of lenders still declining applications due to insufficient information.

1. © Experian1
Alternative Data
2018
• © 2018 Experian Information Solutions, Inc. All rights reserved. Experian and the Experian marks used herein are trademarks or registered trademarks of Experian
Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work
may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public

2. ©Experian2
Key Findings
80%
of lenders are
currently relying
on more
than
a traditional
credit
report to
make a decision
Top 3
Benefits
of Alternative
Data
1. Assess ability
to pay
2. Underwriting
insight
3. Expand
universe
20%
say they plan
to use
trended
data in the
future
78%
agree that
alternative
data allows
lenders to extend
credit to
consumers who
would have
otherwise been
denied
of lenders report that they decline more than 5% of
applications because they have
insufficient information to make a loan decision
60%

3. ©Experian3
1%
2%
8%
20%
30%
39%
41%+
31%–40%
21%–30%
11%–20%
6%–10%
0%–5%
Credit Declines
More than 60% of lenders decline more than 5% of applicants due to
insufficient information
Q3. Approximately what percentage of applicants were declined during the last 12 months because there was insufficient
credit information to make a lending decision? (n=150)
between 6% and 20% of applicants
as a result of insufficient information
50% OF LENDERS
DECLINE

4. ©Experian4
TECHNOLOGY
Q4. Which of the following best describes the information your organization currently uses to make credit decisions? (n=187)
Q9. For each of the information sources listed below, please indicate whether your organization currently uses. Multiple responses allowed (n=193)
Credit Decision Sources
Most lenders rely on more than a credit report to make a credit decision
24%
35%
40%
48%
67%
75%
79%
85%
Payday/Title loans
Telecom/Utility
Rental
Trended data
Assets (VOA)
Public Records
Employment
Income
16%
80%
4%Other
Information
Credit
Report Only
Use Credit
Report +
Other Info
for credit
decisions
Information Sources for Credit Decisions Current Information Sources

5. ©Experian5
Q12. You indicated that your organization uses alternative data. For what aspect(s) of the lending process does your organization currently leverage
alternative data? (Please select all that apply) (n=157)
Q13. In your opinion, what are the primary benefits of using alternative data? (Select up to 3) (n=155)
Alternative Data Uses
Most lenders rely on more than a credit report to make a credit decision
%Agree/StronglyAgree
How lenders are using credit reports
Reasons FIs
use alt data
Top 3 Benefits
25%
24%
7%
12%
3%
22%
7%
0%1%
5%
11%
12%
14%
15%
21%
22%
Other
Assess customer
profitability
Mitigate fraud/AML
check
Refine pricing
Check identification
Expand universe
Underwriting insight
Ability to pay

6. ©Experian6
34%
71%
78%
85%
Attitudes Toward Alternative Data
Lenders view alternative data as an asset for financial inclusion
%Agree/StronglyAgree
Q15. Next, we would like your opinions on alternative data. For each of the following statements, please rate your level of your agreement.
(n=154)
Digitally connecting account data
would streamline the lending
process
Consumers will increasingly
permission data as long as they
are empowered to turn it on/off
Alt data helps consumers who
would have been declined
Alt data is a tool to suppress
high-risk consumers

7. ©Experian7
Q15. Next, we would like your opinions on alternative data. For each of the following statements, please rate your level of your agreement. (n=154)
* Responses may be counted in multiple categories given that lenders serve more than one risk category and offer multiple lending products.
Attitudes Toward Alternative Credit
%Strongly Agree/Agree
Total
Risk Profile* Product Type*
Super
Prime/
Prime
(N=79)
Near
Prime
(N=64)
Subprime/
Deep
Subprime
(N=46)
Thin File/
Invisible
(N=33)
All
Profiles
(N=44)
Secured
Lending
(N=125)
Unsecured
Lending
(N=101)
Digitally connecting financial account
data would allow me to streamline the
lending process
85% 92% 94% 88% 91% 75% 86% 86%
Alternative finance data allows us to
extend credit to consumers who
otherwise would have been declined
78% 75% 78% 74% 79% 87% 79% 76%
Consumers will increasingly agree to
permission their data for lending as
long as they are empowered to turn it
on and off
71% 76% 79% 83% 76% 64% 73% 72%
Alternative data is primarily a tool to
suppress high-risk consumers
34% 30% 36% 44% 46% 32% 34% 34%
Attitudes Toward Alternative Data
Lenders that serve all risk profiles are the most likely to see alternative
data as a way of expanding their universe

8. ©Experian8
6%
6%
8%
11%
13%
14%
15%
20%
Income (VOI)
Employment
Public records
Payday/Title loans
Assets (VOA)
Telecom/Utility
Rental payment history
Trended Data
Future Use of Alternative Data
One in five plan to use trended credit data in the future
Q9. For each of the information sources listed below, please indicate whether your organization plans to use in the future. (n=193)
PlantoUseintheFuture 1 in 5
plan to use trended
credit data

9. ©Experian9
1%
12%
14%
16%
16%
18%
23%
Alternative Data Barriers to Usage
Regulatory constraints are the biggest barrier to incorporating alt data
Q23. Which of the following, if any, do you perceive as barriers to using alternative data? (Select all that apply)
BarrierstoUsing
AlternativeData
*Other: Trust of vendors, affiliation with competitive lenders, concern sharing PII, secondary markets
Complying with
laws/regulations
Data quality
System constraints
Developing
policies/procedures
Developing/testing new
models
Talent capability to build
models
Other*
#1
Reason not using
alternative data

10. ©Experian10
Survey Methodology
28%
20%
15%
15%
9%
13%
$100M – $249M
$250M – $499M
$500M – $999M
$1B – $4.99B
57%
13%
5%
8%
17%
Bank/Credit Union
Auto Finance
Marketplace Lender
Mortgage Lender
Other
Q27. Industry:
Q28. Title:
Q29. Asset Size:
24%
22%22%
2%
20%
Executive (C-Suite, EVP)
Senior Leadership (VP, Director)
Manager
Analyst
Industry Asset
Size
Role
Alternative data was defined as FCRA-compliant data points that are not available on a traditional credit
report such as rental payments, utility payments, short-term/payday lending and financial transaction data.
• Online survey of 276 partial and completed responses were collected across industries
including banks, credit unions, auto finance, mortgage, bankcard issuers and utility
providers
• Survey fielded between January 23 – February 1, 2018

11. ©Experian11
To learn more, visit:
www.experian.com/alternativedata