Several new startups have launched with the intent of lending to borrowers based on data gathered from a borrower's phone. This trend is playing out around the world as new lenders are figuring out how to use new datasets to more accurately determine creditworthiness.
Many mature markets, including the U.S., U.K., India and South Africa, tend to incorporate both positive information, like having a long credit history, and negative information, like paying bills late, when calculating creditworthiness, said Norm Magnuson, the vice president of public affairs for the Consumer Data Industry Association. When countries take both positive and negative events into account, the system is referred to as “full file.” (Here is a list of countries ranked by how they determine creditworthiness.) Some countries, including Brazil, Spain and France, only report negative events into a credit score. Australia formerly had a negative-only reporting environment, but is transitioning to a new system that will incorporate positive events.