Score XD uses consumer report data, such as telco, utility
and property record information, which is not captured in
the credit files maintained by the three largest CRAs, but is
demonstrably and statistically predictive of the individual’s
As a side note, the credit files maintained by the three
largest CRAs contain trace amounts of telco, utility and
rental data that may be referred to by some as alternative
data. Just how sparsely reported is this information? An
estimated 92% of US adults have a cell phone, however,
just 2.5% of all consumer credit bureau files contain telco
account information. The story is similar on the utility
account side, where over 60% of American adults pay for
utilities, but just 2.4% of consumer credit bureau files contain utility (non-telco) payment information.
Much like with utility and telco, rental data is rarely
encountered in consumer credit files. The US Census
bureau estimates that there are 240 million adults in the
US, with 35% living in rental housing. Of the roughly 80
million US adults who live in rental housing, we found that
just 270,000 (or 0.3%) of those consumers have a rental
trade line reported in their credit file. There simply isn’t
an opportunity to safely and soundly score millions more
Americans using credit bureau data alone. To score more
people, we need to use truly alternative data.
ASSESSING ALTERNATIVE DATA
A key reason there’s an opportunity to score more
consumers today is the growing number of alternative data
providers with national scale that have entered the market
in recent years.
Telecommunications payment data, for instance, has many
of the same qualities as data reported in traditional credit files.
While very little of this data resides at the CRAs, more complete telecom data is available from alternative sources that include positive payment history as well as negative information.
Property and public record data is another good example of
useful alternative data. These data sources tend to be inclusive
of large groups of consumers, and can provide both positive as
well as negative information relating to credit risk.
FICO’s six point test for alternative data sources include:
• Regulatory compliance. Any data source must comply
with all regulations governing consumer credit evaluation. It’s also critical to be able to clearly explain the
role the data plays to consumers and regulators.
• Depth of information. The more detailed the data,
the greater the value it may offer.
• Scope and consistency of coverage. Since the goal
is to score as many consumers as possible, useful
databases must cover a broad percent of the population. For instance, with more than 90 percent of U.S.
adults using cell phones, mobile companies are a data
source with broad coverage.
• Accuracy. Inaccurate data compromises its predictive value. Data repositories must ensure accuracy.
• Predictiveness. The data should predict future consumer repayment behavior. For example, consumers
who have been at their addresses for longer periods
are more likely to pay credit obligations than those
• Additive value (aka “orthogonality”). Useful data
sources should be supplemental to credit bureau
One of the data sources that met all the guidelines
detailed above in FICO’s six point test was The National
Consumer Telecom and Utilities Exchange, Inc. (NCUTE).
NCTUE is a member-owned database through which its
member companies exchange source-anonymous information which include new connect requests, payment history
and historical account status for telecommunications (e.g.,
landline and mobile), pay TV (e.g., cable and satellite) as
well as a small amount of utility information. The database
contains information on more than 210 million consumers
and includes both positive and negative payment history.