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© 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.
Our Conversation Today
• Introductions
• Alternative credit data overview
• Hit-rate analysis and data performance
• Account review use case
• Q&A
2 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Introductions
Experience: 20 yrs. in Banking and FinTech Experience: 18 yrs. in U.S. credit and
Responsibility: database management
3 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Alternative Credit Data Overview
4 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
The Riddle of Alternative Credit Data
of consumers?
under
23% 18 years Primary Credit Report
Data Sources
Tradelines
Mainstream
Finance
Inquires
Deeper View of Your Consumer
Public Records
> Bankruptcy
5 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
What is Alternative Credit Data?
‒ Bankruptcy • Consumer
permissioned data
• Strengthen & expand portfolios Consumers • Enter markets via new business
• models (e.g. Fintech)
Increase & sustain competitive ▪ Increased access to
advantage affordable financing • Grow in underserved segments
• (e.g. Alternative Finance)
Improve customer experience ▪ Speed / ease / convenience
• Differentiate data assets &
▪ Build credit
engage consumers (e.g.
Information Services)
7 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
How alternative data sources relates to consumer credit
worthiness
• Rental data
• Address history
• Expanded Internal
records Ability
The traditional Stability to repay
credit profile data
was developed to
assess a consumers
credit worthiness
• Rental data
• AFS data
Willingness • Cash flow
• AFS data to repay • Expanded Internal
• Bill payment records
• Subscription data • Education data
8 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Experian’s pursuit of alternative credit data
9 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Rental data
Summary: Value:
Risk
• Experian’s RentBureau® is the largest U.S. score
rental payment database change
10 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Expanded public records
Experian’s Extended ViewSM score leverages Value: Extended ViewSM adds ~10% lift in
public records to score ‘thin-file’ and ‘no-hit’ evaluating credit worthiness for thin-file consumers
consumers
• Information in a consumer’s public record that is
located at the state and local level
• Property and assets
• Address stability
• Education
• Identity verification
• Risk factors
• Professional licensure
• Aggregated and managed in an FCRA compliant
data warehouse
11 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Account aggregation
• Users permission access to their bank, brokerage Minimize risk – Mortgage fraud related to Income
and 401k accounts; 95% of all U.S.-based checking and Assets is up 16.9% from 2016 to 2017
accounts can be accessed Aggregation based verification directly from banks
• Verify eliminates paper based fraud
• Account ownership
Personalize experiences – Consumers expect
• Frequency of deposits and withdrawals quick and easy access to credit
• Direct deposit income and individual transactions
• Reports are FCRA compliant and can be used in Unlock intelligence – To remain competitive with
underwriting decisions as well as for simple verifications shift toward increased automation and digitization
of income, assets and cash flow
12 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Alternative financial services
Summary:
• Experian’s Clarity is largest U.S. specialty
credit bureau
• Primarily serving non-prime population
and lenders
• 60+ million consumers on-file
• Includes both positive and negative loan
payment data
• Real-time credit reporting
• Founded 2008
• 100 employees; Clearwater, FL
13 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Experian Alternative Credit Data
Online
File OneSM
Batch Trade line / inquiry /
public record
Mobile apps
Data Platform
Web apps
Consumer
Clarity
Business / Permissioned
partner apps
Internal apps Additional
(Experian) RentBureau®
FCRA assets
14 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Alternative credit data is unique & additive
National • 1 open auto loan Thin credit file gives little insight into
Credit Bureau • 2 credit cards credit risk.
RentBureau • 1 open and current rent trade RentBureau shows one open and current
• No derogatory rental history rental trade with no derogatory information.
Finicity • Verified income: $ 5,127 Finicity confirms income and assets with
• Verified assets: $16,944 consumer permission.
15 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
16 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
17 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
18 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
19 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
20 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
21 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Summary of Alternative Credit Data Whitepaper Findings
Alternative finance
consumers tend to be
much younger, on
average, than the U.S.
population on File One.
60%
23 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Hit rate analysis methodology
24 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
VantageScore® 3.0
Model Overview
25 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
There are several ways to use alternative credit data
Suppression Criteria
Score
26 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Existing auto hit rates
Alt
Finance Overall Hit Rates:
15% Percentage of consumers in each score band that have alternative
finance data
15%
of consumers with an 61%
auto trade matched to
Clarity alternative
No Alt Finance
finance data
85%
50%
44%
37%
Average VantageScore®
704 717
28%
627 26% 23%
9%
3%
5% 4%
0%
Overall Hits No Hit Super Prime Prime Near Prime Subprime Deep Subprime Exclusion
27 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Existing auto consumers with alt finance presence are more
likely to be 90+ DPD in the first 12 months
Auto 90+ Bad Rate
by VantageScore V3 Band
18%
16%
433% more 15.5%
likely to go
14%
90+ DPD
12% 11.5%
10%
8.5%
8%
6% 4.8% 4.8%
4% 2.9%
2% 1.4%
0.90% 0.7%
0.1% 0.1% 0.3%
0%
Total Super Prime Prime Near Prime Subprime Deep Subprime
Clarity Hit Clarity No Hit
28 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Existing bankcard hit rates
Alt
Finance Overall Hit Rates:
10% Percentage of consumers in each score band that have alternative
finance data
10%
of consumers with a
bankcard trade matched 58%
to Clarity alternative
No Alt Finance
finance data
90%
39%
40% 39%
Average VantageScore®
736 745
656
20%
13%
8%
7% 4%
3%
0% 0%
Overall Hits No Hit Super Prime Prime Near Prime Subprime Deep Subprime Exclusion
29 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Existing bankcard consumers with alt finance presence are
more likely to be 90+ in the first 12 months
20%
16.8%
15%
10.4%
10% 7.4%
5.5%
5% 3.0%
1.10% 0.1% 0.0% 1.0% 0.4%
0%
Total Super Prime Prime Near Prime Subprime Deep Subprime
Clarity Hit Clarity No Hit
30 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Existing personal loan trade hit rate
Overall Hit Rates:
Alt Percentage of consumers in each score band that have alternative
Finance finance data
24% 24%
43%
Average VantageScore®
19%
12%
12%
3%
0%
1% 0%
Overall Hits No Hit Super Prime Prime Near Prime Subprime Deep Subprime Exclusion
31 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Existing personal loan consumers with alt finance presence
are more likely to be 90+ in the first 12 months
Personal Loan
90+ Rate
30%
315% more 25.1%
25% likely to go
90+ DPD
20% 18.6%
15%
11.3%
10%
7.5% 6.9%
4.5%
5%
1.80% 2.5%
1.6%
0.2% 0.1% 0.6%
0%
Total Super Prime Prime Near Prime Subprime Deep Subprime
Clarity Hit Clarity No Hit
32 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
The added value of Clear Early Risk ScoreTM
33 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
The power of adding
alternative credit data
40% Near prime population
Cumulative % of Bad Accounts
35%
30%
0%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Top % of Score
Swap in strategies:
Consumers bucketed as
near prime/subprime,
with better performance
rates than average
35 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Utilizing Clarity data to refine
account management strategies
Collection Improve
Line strategies
strategies cross-sell
Loss
Forecasting
36 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Loss Forecasting with Alternative Finance Data
37 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Takeaways
2 Can be used to gain a deeper view of the consumer (current and prospective)
38 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Questions?
39 ©Experian Experian Public September 2018 Diving for Data – How Alternative Credit Data Provides Lift in Your Portfolio.
Thank you!
© 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.