Startups are using new datasets to assess your credit worthiness. New lenders are using information pulled from your social activity, telco usage and geo location. One of these companies, is ZestFinance, “[The company] analyzes thousands of potential credit variables... to better assess factors like the potential for fraud, the risk of default, and the viability of a long-term customer relationship,”
“People ages 18 to 34 are predisposed to hate banks. They want financing, but hate paying interest—hate the idea of being stuck in debt. But they’re willing to pay a fee upfront to split a payment over several months. We can underwrite people that the system sees as terrible risks with better clarity.” ZestFinance, another startup, is using big data to make credit decisions. Rather than using simple credit checks, the company looks at certain variables on a credit report along with how people use smartphones and social network. ZestFinance says that its use of bulk data collection delivers a 40% improvement in default rates over current industry scoring methods. The company didn’t provide its typical default rates.