Alt Data Aims to Shake up Credit Scoring Business

Young firms, using machine-learning methods to scrape consumer info, challenge 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 50 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 analyzing a wider range of data on consumers. They claim their methods

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