New Pathways for Financial Inclusion in Lending

Traditional loan products can provide tremendous advantages to millions of consumers as they work hard to create future opportunities for themselves and purchase a home to achieve the American dream.

In his 1931 book, "The Epic of America," James Truslow Adams coined the term the "American dream," where men and women are empowered to work hard - often using education and homeownership as key pathways -- to reach an individual definition of success in life. The distinction was the idea that opportunity was afforded to everyone rather than just those born into a specific societal class1. Fast forward nearly a century later and the American dream remains out of reach for many consumers.

“Nearly 50 million people in the United States have no usable credit scores, making credit less accessible and more expensive for them2.

In the United States today, tens of millions of people face barriers to participation in the financial system - either hard barriers (inability to get an account) or soft barriers (higher fees). Disproportionately, this pervasive issue impacts the historically underserved populations. What are financial institutions and credit agencies doing to increase financial inclusion?

Financial inclusion, the availability and equality of opportunities to access financial services4, is achievable and regulators are pushing for new ways to make lending decisions fairer and more equitable. With an increasing amount of data available through a wide range of networks, we can find new paths for opportunity: a credit score reflects the use of prior credit, but it does not need to be the only measure of creditworthiness.


Unlocking Access: Advancing Towards More Equitable Financial Services


In an effort to address this problem, financial institutions and credit agencies have begun to look at alternative sources of data, such as deposit account and bill payment history, which can all be important indicators of ability to pay.

The Office of the Comptroller of the Currency (OCC) has spearheaded Project REACh (Roundtable for Economic Access and Change), a broad-based coalition of financial institutions, advocacy groups, and government agencies with a mission of removing barriers for underserved people to participate in the nation’s economy fully and fairly. 

Early Warning is a participant in Project REACh’s Alternative Credit Assessment Utility Workstream. By bringing regulating bodies, the credit bureaus, banks, and companies including Early Warning together, this workstream is intended to help broaden the market of qualified borrowers to include consumers who might not otherwise qualify for credit using traditional credit bureau data.

Early Warning’s Expand Credit Insights solution allows lenders to expand credit decisioning criteria with financial institution-contributed deposit account data on no-hit and no-file consumers directly through the three major credit bureaus. The demand deposit account (DDA) data provided by Early Warning will give participating financial institutions additional insight for lending decisions and the management of credit underwriting risk, while potentially broadening the market of qualified borrowers to include consumers who might not otherwise qualify for credit using traditional credit bureau data.

For more information on how financial services organizations and banks can supplement credit lending decisions and modernize origination processes contact us or learn more about our Expand Credit Insights product.

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1A Better Life: Creating the American Dream. American Public Media, May 2009; accessed on September 9, 2021.

2OCC Fact Sheet, retrieved 8/19/2021

4Consumer Protection and Financial Inclusion, retrieved 8/23/2021

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