China has made a landmark deal with the Southern California credit scoring firm ZestFinance.
It’s not exactly clear how ZestFinance is going establish correlations between searches and the chances a consumer would pay back a loan, but it’s not an entirely new idea. New considerations are being added to the mix all the time.
“You have companies that are looking at your bank statements. You have companies that are looking at your on-time rent payments, which have traditionally not been a part of your credit score,” Cetera, Credit Analyst with Bankrate.com said.
Cetera says consumers may think alternative models for determining credit-worthiness would only apply to young people who have never had a credit card, but sometimes, it can be hard to access seniors.
“You got a mortgage a long time ago, or you got credit cards a long time ago, or you haven’t used credit for a long time – so you may have a thin credit history, or no credit score at all,” Cetera said.
Online searches and spending habits could affect a decision, according to Cetera.
“They could be looking at where you’re shopping, and how much you’re spending, and seeing if that correlates to you being able to pay back a loan,” Cetera said.
Fitch Ratings estimates only about 35% of Chinese customers have a formal credit history. Experts believe many of the 65% without a history will be happy to give up a bit of privacy to get more easily available credit.