Alternative data provides a new way of approaching credit and can expand financial opportunities to a wider set of Americans.  Alternative data includes things like short term installment loans, rent-to-own information, telecommunications, pay TV, and home security.  It provides a more holistic image of financial history, which has the capacity to move 8.4 million more Americans into a scorable credit band. 

Helping Americans move into a scorable credit band is important, as many individuals struggle with credit invisibility.  This results in higher costs; for example, individuals with subprime credit scores pay $400 million more in interest for a $550 emergency loan over three months than individuals with prime credit scores. 

Equifax hopes to leverage alternative data to benefit American consumers.  Utility and telecom data, a type of alternative data, is able to score 25% of credit unscorables.  This translates to 6.5 million Americans moving from an unscorable band to a scorable one with utility and telco data alone.

This is especially helpful, as 91% of American adults have at least one utility bill in their name.  This means that many Americans may benefit if utility and telecom data is factored into credit.  Utilizing alternative data creates a more complete financial picture, allowing for lower-risk and more affordable lending options. 

Alternative data is beneficial when it comes to determining a more expansive understanding of credit.  It can open the door to millions of Americans, boosting them into scorable credit bands.  Considering alternative data is useful, and is something to keep in mind moving forward.