Experian Introduces New Credit Scoring Suite for Thin File Consumers

Earlier this month Experian announced a new suite of credit score products. Called Experian Lift, it is designed to provide a more holistic view into consumers’ creditworthiness with a goal of expanding the scored universe to include more of the thin file/no file segment (the Wall Street Journal covered the announcement here).

We wrote about Experian’s Clear Early Risk Score that was released more than 18 months ago and was the product of their acquisition of Clarity Services. This month’s announcement is the culmination of this earlier work that Experian has done in the thin file space.

What is Experian Lift?

Experian Lift is a tool specifically for lenders and will be available in early 2020. Last week, I caught up with Greg Wright, executive vice president and chief product officer for Experian Consumer Information Services, who was responsible for developing Experian Lift.

Greg shared that there are three core components to the Experian Lift score:

1. Traditional credit data – the same data that is available with the standard credit score.
2. Trended data – shows changes in credit behavior by looking at a 24-month view of consumers’ credit data.
3. Alternative data – alternative financing data, rental payments and full-file public records, including licenses.

Early testing has shown that Experian Lift enhances predictive performance by 23%, compared to other credit scores, when underwriting thin file/no file consumers. Half of that lift comes from the new data being included and the other half comes from improvements in the machine learning models.

Greg said that he expects lenders will use Experian Lift in one of three ways:

1. Primary score – this is most applicable to lenders targeting the thin file population.
2. Second chance score – for loan application declines to give consumers a second chance.
3. Overlaying an existing score – it can help lenders better price consumers with the additional data, but it also can allow lenders to say yes to consumers they might have said no to without the Experian Lift Score or say no to someone they might have said yes to without the score.

Experian has ten pilot clients that have been identified and are currently working through the validations with these clients. Greg was very excited about all the testing they have done to date and the improvements this will bring to consumer lenders.

Experian Lift and Experian Boost

I asked Greg how he expects Experian Lift to interface with Experian Boost that was announced earlier this year. Experian Boost is a consumer-facing product, it is where consumers give Experian permission to connect their bank account so they can add positive telecom and utility payment history directly into their Experian credit file. In effect, this information becomes part of the consumers’ credit report. You may have seen the TV ads they have been running that show consumers who have had their credit score improved instantly with Experian Boost.

Experian Lift is a lender-facing product that uses all the data in consumers credit reports. So, if someone has connected this data with Experian Boost it will be included with the credit report, so it is no longer considered alternative data. The real innovation with Lift is the inclusion of trended data and alternative data into the new score.

Trended data has been around for many years and all three major credit bureaus include this data. But Vantagescore 4.0 is the only credit scoring model that incorporates trended data right now. That will change with the launch of Experian Lift early next year.

Here is an official statement from Greg Wright about the release of Experian Lift:

There are more than 100 million consumers who are restricted by the traditional scoring methods used today. We’re committed to improving financial access while helping lenders make more informed decisions. Experian Lift is our latest example of this commitment brought to life.

My Take

There is so much data available today to help with underwriting decisions. But, of course, we can only use data that is compliant with the Fair Credit Reporting Act. I applaud Experian for continuing to push the envelope when it comes to bringing more consumers into the credit scoring universe. There are clearly many millions of people who would prove to be creditworthy if only given the chance. With Experian Lift more of them will get that chance.