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Rohit Garg

Co-Founder & CEO of SmartCoin

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How Alternative Credit Scoring Is Helping Borrowers Obtain Loans Even Without A CIBIL Score?

New-age alternative credit scoring companies utilize such concrete methods like analyzing a prospective consumer’s digital footprint to assess their creditworthiness.

The rise of Alternate credit scoring has instrumented the development of a broad-based credit scoring methodology. It is able to transcend traditional strictures decreed by regulatory bodies like CIBIL. Interestingly, the next-gen consumers who are quite new to the credit and lending ecosystem have the opportunity to extract maximum advantage through alternative credit scoring mechanisms.

Until now, there has been a dearth of structured data for such emerging customers. However, a fast-paced transition to novel alternate credit scoring would not prevent them from gaining access to credit. These days, new-age alternative credit scoring companies utilize such concrete methods like analyzing a prospective consumer’s digital footprint to assess their creditworthiness. This proves beneficial for both the parties. How?

Well, the young customers who are freshly introduced to the credit and loan financial landscape can now also receive loans by furthering their credit access in spite of a low credit score data on traditional platforms. Lenders, too, stand to benefit as they can now avail alternative credit scoring channels to amplify their reach in hitherto unchartered territories like semi-urban and rural areas while minimizing risk levels and chances of fraud.

How does it work?

Alternate credit scoring is a revolutionary model that leverages a number of cutting edge technologies to assess several factors like the payment history of the loan applicant seeker payment, bank balance, e-commerce purchasing, travel size, and expenditure patterns. It capitalizes on the optimisation of emergent technologies and digital footprints like social media and email and internet usage to corroborate if a potential borrower qualifies for the loan. A comprehensive assessment of the borrower profile helps in enhancing the probability of a decent loan disbursement. It also aids in safeguarding banks, NBFCs, and financial institutions by extending them relevant and meaningful data rather than the run of the mill information that most credit scoring agencies supply.

In case of successful loan processing, it aims to grant sufficient substantiation to lenders that the applicant possesses the intention and capability to effectively repay back his/her loan. In such scenarios, lending companies tend to heighten their bottom line and further develop their client base. This also lends them a chance to arrive at more promising conclusions while cutting down the risk of being dealing with customers who have an adequate typical credit score and yet suffer from undesirable payment practices regarding their monthly considerations or utility charges.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house



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