This paper, published in the Journal of Risk Management in Financial Institutions, demonstrates the value of non-traditional data as a powerful tool for consumer credit risk assessment while highlighting some of the potential risks and precautions that lenders need to think about before using these tools.
As the Brazilian congress weighs its options, we survey and analyze the more comprehensive and systematic of the studies to detail important lessons to consider on the eve of credit reporting reform in Brazil.
The study assesses the impact of varying participation rates on access to credit and default rates in Latin America. A series of micro-simulations demonstrates the importance of participation in a private, full-file credit reporting system.
The study compares the fragmented Japanese consumer credit reporting regime with a hypothetical comprehensive one. Impacts of the varying regimes — each with different types and amounts of payment information available to creditors — upon access to credit and default rates, growth in lending to the private sector and overall economic growth are examined.
PERC’s landmark study on bringing the estimated 35 to 54 million Americans outside the mainstream credit system into the credit fold, Give Credit Where Credit Is Due offers feasible market solutions involving “alternative” or non-traditional payment data, such as payment obligations such as rent, gas, electric, insurance, and other recurring obligations, to evaluate the risk profile of a potential borrower.
PERC’s initial study on alternative data, Giving Underserved Consumers Better Access to the Credit System examines the likely win-win outcome if non-traditional data is included in credit files.
This study confirms the findings of the initial FCRA study. It examines degradation in predictive power of a generic commercial scoring model, even when that model is “re-optimized” or“retooled” to account for the simulated data restrictions.
PERC fellow Dr. Joseph Duncan discusses FCRA reauthorization in the Journal of Business Economics. Reprinted with permission from the National Association for Business Economics, 1233 20th St NW, Ste 505, Washington, DC 20036, www.nabe.com.
This is PERC’s landmark study on reauthorization of the Fair Credit Reporting Act. This study was the primary document used by Congress during the reauthorization.