Alternative data gets a thumbs up: Update on the CFPB’s first no-action letter
- The CFPB published more information about the use of alt data in credit decisioning.
- The results are positive for lender Upstart and for the industry in general.
Alternative data has the ability to increase access to credit and decrease its cost. But, given how early it is in the cycle and how important this is for lenders and borrowers alike, regulators have tread carefully and intentionally approaching the use of alternative data for credit decisions.
First, seek to learn: In 2017, the Consumer Financial Protection Board requested information from the industry to learn more about how lenders are using alternative data.
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