Research Finds Majority of Lenders Now Use Alternative Data in their Underwriting Process

For Nova Credit, we conducted a survey of 185 decision makers in the lending industry in October 2022. The study found that underwriting could be better implemented, with three-quarters (74%) of lenders responding that they believe traditional credit report data does not paint the most complete picture of consumer credit worthiness, with most (59%) now turning to various forms of alternative data in their underwriting process to fill the gap. Lenders can learn from this study’s findings, as while more than half of lenders are tapping sources like non-transaction checking account data (64%), employment/income verification data (67%) and cash flow or bank transaction data (57%) to help complete their view, utility, rent payment and deep subprime data are highly underutilized (all cited by less than 40%). Hopefully our research has shown that by tapping into these relatively untouched data sources, lenders can be more effective.

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Author Notes:

Jeffrey Henning

Jeffrey Henning, IPC is a professionally certified researcher and has personally conducted over 1,400 survey research projects. Jeffrey is a member of the Insights Association and the American Association of Public Opinion Researchers. In 2012, he was the inaugural winner of the MRA’s Impact award, which “recognizes an industry professional, team or organization that has demonstrated tremendous vision, leadership, and innovation, within the past year, that has led to advances in the marketing research profession.” In 2022, the Insights Association named him an IPC Laureate. Before founding Researchscape in 2012, Jeffrey co-founded Perseus Development Corporation in 1993, which introduced the first web-survey software, and Vovici in 2006, which pioneered the enterprise-feedback management category. A 35-year veteran of the research industry, he began his career as an industry analyst for an Inc. 500 research firm.