For individuals opting for credit facility for the first time, who do not have any data pertaining to last re-payment record, financial companies and more so NBFCs and fintech companies are extending small ticket size loan upto 2 lakh resort to alternative data check.
So what alternative data lenders make use of while making financing decision?
To verify your credit-worthiness in whether you are in a financial position to service the debt or not, banks and institutions use your transaction details. Also, data available on social platforms is looked upon for arriving at the financing decision.
Data used as alternative data
1. Bank statement: To figure out your spending pattern, how much transactions you execute in cash or via digital card etc.
2. Transactions on e-commerce platform: Purchases made on e-tailers site whether they are paid in full at one go or purchases are made using an EMI facility available on them.
3. Telephone Bills: If the monthly bills are paid on a monthly basis or not and if there are any overdues.
4. Social media details: For cross-verifying your date of birth, marital status, employment address, address etc. , information furnished on the social platforms is made use of.
5. Data available on your mobile : After you give your authority and consent, representatives from the institutions shall derive the data such as the apps you use.to acknowledge as well as ensure that the prospective borrower is stable financially.
It is to be noted that this alternative data check is done only for small loans and for large ticket loans, credit score and credit report is used by lending institutions. Know how you can improve your credit score so that you qualify for any future credit.