Peter Rudegeair
speaker
756 appearances
12 recordings
1 series
first heard Nov 2017
last heard May 2021
Peter Rudegeair’s voice in public audio — every appearance, attributed to the second.
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This new initiative would use people's deposit account activity.
So that's things like, what's the balance in your checking account over time?
How many times have you overdrawn your checking account?
And those are kind of going to be the new proxies for creditworthiness.
Happy to be here.
So there are about 50 million adults in the US who do not have a traditional credit score today.
Maybe those are recent immigrants who just don't have a borrowing history because they just got to the country.
Maybe they're people who have done most of their finances with cash or debit cards, so they have no history of borrowing.
And that's a population that is largely shut out of things like homeownership or, you know, even getting an auto loan if you can't demonstrate good borrowing behavior.
So this new proposal is aimed at those people.
Instead of looking at a credit score or credit history, which measures things like how many credit cards do you have outstanding, what's your balances on them, have you paid them on time, this new initiative would use people's deposit account activity.
So that's things like what's the balance in your checking account over time.
How many times have you overdrawn your checking account?
And those are kind of gonna be the new proxies for credit worthiness as opposed to the traditional credit score.
Right, so banks have done a little bit of this for their own customers in the past.
So JP Morgan, if you had applied for a Chase credit card before and you had a checking account at Chase, JP Morgan might be able to say, okay, we've run the numbers based on their checking account activity and we think this person is a good credit risk.
That hasn't been possible to do it if, let's say, that's a Wells Fargo deposit customer applying for a Chase credit card.
So what's happening under this proposal is about 10 different banks have agreed to share this checking and savings account data with one another through a number of conduits.
And that way it gets out of the silo problem of you only having visibility into someone you already know from a deposit relationship.
There's two different motivations.
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