Research

Big Issue Invest runs an Alternative Credit Scoring Initiative that will add alternative data, such as rent payments, to traditional credit scoring models.

This is a transformational initiative which may benefit as many as 1.5 million low-income people through better informed, fairer credit decision making, access to mainstream credit and other services.

Millions of people, mainly on low incomes and living in rented accommodation, are declined affordable credit each year. They end up turning to high cost lenders, such that the poorest people end up paying the most for credit.

Many of these people are reliable payers of rent and bills, yet such payment information is not recorded with the credit reference agencies nor used in credit decisions. There is too little information in mainstream credit decision making models to assess their true credit risk.

We have recently completed a proof of concept project to test out the predictive and market value of rent payment data in credit scoring, in partnership with social housing landlords and Experian. This proof of concept has had positive results which will be published shortly.

We are now carrying out a business assessment to assess the social and commercial value of sharing rent payment data. This includes talking with high street banks and other mainstream lenders on use of the data to increase their ability to adequately assess the credit risk and borrowing capacity of the so-called 'thin file/no file' population. This should help them to lend responsibly to low-income consumers and tenants who are currently financially excluded. We are also exploring other uses of the data that would benefit low-income social housing tenants.

This project has been funded by the Friends Provident Foundation, the Joseph Rowntree Foundation, Affinity Sutton, Hyde Housing, Places for People, Raven Housing Trust, The Riverside Group and Selwood Housing.

For further information, please contact sarah@bigissueinvest.co.uk