Debit Scoring Product

Despite the impression conveyed by news media accounts of American's love affair with credit, many adults have little or no credit history. About 30% of lender inquiries to the credit bureau Experian turn up so-called "thin files," or credit histories that are either non-existent or too brief to evaluate with conventional credit scoring tools. To help creditors serve this market, Experian has partnered with eFunds Corp. (Scottsdale, AZ) to utilize eFund's DebitBureau database to help evaluate the creditworthiness of customers with insubstantial credit histories.

According to an article in the American Banker, DebitBureau contains 2.7 billion records which track events in the life of a checking account. Lisa Nelson, eFund's chief privacy officer, said that the database includes the opening date of a checking account, incidents of bounced checks, account closures and check reorders. DebitBureau has mostly been used as a fraud-prevention tool. A company official indicated that DebitBureau verifies about 45 percent of the checks used at the point of sale in the U.S.

Experian has developed a product that correlates debit data from DebitBureau with other credit behavior. The new product, called Cross View, predicts credit behavior about half as well as credit reports and credit scores, but even that represents a significant improvement for certain groups of customers. Helped most are recent immigrants, students and young consumers who have yet to establish a credit history. Cell phone companies have been enthusiastic about the new product. Laura Desoto, vice president of product marketing at Experian, told the American Banker "We are definitely able to document that (these companies) are adding customers whom they otherwise would not have added. We'll know the other part of the business story, about whether those people continue to be good customers or not, over the next year or two."