Alt data aims to shake up credit scoring business

Young firms, using machine learning methods to scrape consumer info, are challenging the established agency model

Custom dictates that lenders rate an individual’s ability to repay a loan by checking their credit history. It’s a simple concept that has been the bedrock of consumer lending since the Fair Isaac Corporation – now Fico – designed the first credit scoring algorithms 30 years ago.

Now, a new generation of upstarts are trying to topple this convention. Two challengers, Credit Kudos and Aire, are developing ways of collecting and analysing a wider range of data on consumers. They claim their