Alternative data generally refer to information used to determine a consumer’s creditworthiness that the national consumer reporting agencies — Equifax, Experian, and TransUnion — do not traditionally use to calculate a credit score. These reporting agencies generally create consumer reports containing historical information about repayment on credit products such as mortgages, student loans, credit cards, and auto loans. Credit applications, bankruptcies, and debts in collection also are regularly included. In contrast,alternative data include additional consumer financial data not regularly contained in traditional credit files. New technology makes it possible for financial institutions to gather other information, including financial and non-finanical data, from a variety of sources.
The Consumer Financial Protection Bureau (CFPB) included the following list of alternative data examples in a 2017 request for information:
Data showing trends or patterns in traditional loan repayment data.
Payment data relating to non-loan products requiring regular (typically monthly) payments, such as telecommunications, rent, insurance, or utilities.
Checking account transaction and cash flow data and information about a consumer’s assets, which could include the regularity of a consumer’s cash inflows and outflows, or information about prior income or expense shocks.
Data that some consider to be related to a consumer’s stability, which might include information about the frequency of changes in residences, employment, phone numbers or email addresses.
Data about a consumer’s educational or occupational attainment, including information about schools attended, degrees obtained, and job positions held.
Behavioral data about consumers, such as how consumers interact with a web interface or answer specific questions, or data about how they shop, browse, use, devices, or move about their daily lives.
Data about consumers’ friends and associates, including data about connections on social media.
