The emergence of alternative credit scoring pathways has led to the creation of a broad-based credit scoring method. Industry experts say this new model is capable of going beyond conventional constraints imposed by financial regulation entities like CIBIL.
Rohit Garg, Co-Founder and CEO, Smartcoin, says, “Intriguingly, the new-age consumers who have just been introduced to the intricacies of the credit and lending vista now stand a chance to reap substantial benefit by leveraging alternative credit scoring channels.”
He further adds, “Up till the present, there had been a hitherto glaring deficit of structured data for such novel customers. Nonetheless, an accelerated shift towards advanced financial tactics such as alternate credit scoring will not hurdle their bid to achieve credit access.”
Nowadays, out of the box, alternative credit scoring enterprises is fast optimizing such tangible techniques assessing a potential consumer’s digital impressions to ascertain their creditworthiness. Experts say this method renders mutual benefits to both the involved parties.
For instance, an individual who is newly initiated with the multifaceted features of the credit and loan financial ecosystem can now also obtain loans by forwarding their credit access ability even in the case of a low credit score data reflected on conventional platforms.
Similarly, Garg says, “lenders, too, can reap advantage as they can now utilise alternative credit scoring pathways to heighten their credit outreach in extent unventured and virgin terrains such as remote and rural areas while simultaneously cutting down risk levels and financial embezzlements.”
Here is how it works;
Alternate credit scoring is a financial approach that optimizes numerous technologies such as ML, AI-based models to gauge various tangents such as the loan applicant’s payment history, overall bank balance, e-commerce transactions, travel range, and expenditure blueprint.
Garg says, “Alternate credit scoring is based on the synergic assimilation of next-gen technologies alongside the assessment of digital characteristics of a borrower that can be generated through one’s social media and email and internet use to confirm if a potential borrower is eligible for the loan.”
He adds, “An in-depth scrutiny of the borrower profile helps in improving the odds of loan dispersal. It also assists in fortifying and protecting banks, NBFCs, and financial institutions by offering relevant and actionable data to them instead of extending traditional data sets that a majority of credit scoring agencies furnish.”
When it comes to successful loan processing, experts say, this financial model can offer adequate validation to lenders regarding the creditworthiness, good intent, and capacity of an applicant towards successfully repaying his/her loan.