United States: Use of alternative data in credit underwriting
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Four U.S. federal regulatory agencies have issued the “Interagency Statement on the Use of Alternative Data in Credit Underwriting.”
Developed in response to a U.S. Government Accountability Office recommendation, the statement focuses on consumer protection implications of the use of alternative data in underwriting.
Through the statement, the federal agencies:
- seek to encourage the responsible use of alternative data.
- explain that many factors associated with using alternative data, including cash flow data, may increase or decrease consumer protection risks.
- explain that a well-designed compliance management program provides for a thorough analysis of relevant consumer protection laws and regulations to ensure firms understand the opportunities, risks, and compliance requirements before using alternative data.
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